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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
June 29, 2026
TERRA PROPERTY TRUST, INC.
(Exact name of registrant as specified in its
charter)
| Maryland |
|
001-40496 |
|
81-0963486 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
205 West 28th Street, 12th Floor
New York New York 10001
(Address of principal executive offices, including
zip code)
(212) 753-5100
(Registrant’s telephone number, including
area code)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e- 4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
| 6.00%
Senior Notes due 2026 |
TPTA |
New York Stock Exchange |
| 7.00% Secured Notes due 2029 |
TPTS |
New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
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.
| Item 1.01 |
Entry into a Material Definitive Agreement. |
Exchange
Offer
On June 30,
2026, Terra Property Trust, Inc., a Maryland corporation (the “Company”), completed the previously disclosed exchange
offer for the Company’s 6.00% Senior Notes due June 30, 2026 (the “TPTA Notes”) that expired on June 26, 2026
(the “Exchange Offer”). Pursuant to the Exchange Offer, the Company offered to exchange all validly tendered TPTA Notes for
a combination of (i) new 11.00% Senior Secured Notes due July 1, 2027 of the Company (the “Exchange Notes”) and
(ii) cash.
The Exchange
Offer expired at 5:00 p.m. New York City time, on June 26, 2026, and the final settlement of the Exchange Offer took place on
June 30, 2026.
In connection
with the Exchange Offer, the Company filed a registration statement on Form S-4 (File No. 333-295631) relating to the issuance
of the Exchange Notes with the U.S. Securities and Exchange Commission (the “SEC”) on May 7, 2026 (as amended from time
to time, the “Registration Statement”), which was declared effective by the SEC on June 26, 2026. The Exchange Offer
was made pursuant to the terms and conditions set forth in the Registration Statement, which contains a more comprehensive description
of the Exchange Offer.
Also, on
June 30, 2026, the Company repaid the remaining outstanding principal balance of the TPTA Notes.
Indenture
As previously
announced, $36,208,750 of the TPTA Notes were validly tendered and not withdrawn in the Exchange Offer. On June 30, 2026 (the “Issue
Date”), the Company issued Exchange Notes with an aggregate principal balance of $27,156,250. The Exchange Notes were issued pursuant
to an Indenture (the “Indenture”), dated June 30, 2026, by and between the Company and U.S. Bank Trust Company, National
Association, in its capacity as trustee and collateral agent, a copy of which is filed as Exhibit 4.1 hereto, and is incorporated
herein by reference.
The Exchange
Notes are the senior secured obligations of the Company to the extent of the value of the Collateral (as defined below) securing the Exchange
Notes (subject, as to the Shared Collateral (as defined below), to the terms of the Intercreditor Agreement (as defined in the Indenture)),
pari passu in right of payment with the Existing Secured Notes (as defined in the Indenture) (subject to the terms of the Intercreditor
Agreement) and all of the Company’s existing and future unsubordinated debt that is not expressly subordinated in right of payment
to the Exchange Notes, senior in right of payment to any of the Company’s existing and future debt that is expressly subordinated
in right of payment to the Exchange Notes, effectively senior to the Company’s existing and future debt that is unsecured or that
is secured by a junior lien on the Collateral, in each case to the extent of the value of the Collateral securing the Exchange Notes (subject,
as to the Shared Collateral, to the terms of the Intercreditor Agreement), effectively subordinated to all of the Company’s existing
and future debt, guarantees and other liabilities (including trade payables) that are secured by liens on assets that do not constitute
a part of the Collateral securing the Exchange Notes to the extent of the value of such assets securing such debt and other liabilities
(including with respect to the Supplemental Liquidity Financing (as defined in the Indenture)), and structurally subordinated to all existing
and future debt and other liabilities (including trade payables) of any existing and future subsidiaries of the Company. Subject to certain
exceptions, the Exchange Notes are secured by a perfected security interest in the Collateral.
As of the
Issue Date, the Exchange Notes were not guaranteed by any of the Company’s subsidiaries. Subject to certain exceptions, the Exchange
Notes are secured by perfected liens granted by the Company on certain equity interests in the Company’s subsidiaries held by the
Company from time to time, as more fully described in the Registration Statement. Subject to certain exceptions described in the Registration
Statement, the Company has initially granted liens in the following (collectively with any liens on additional collateral that are granted
by the Company from time to time, the “Collateral”): the equity interests the Company holds in (i) Terra East Dallas
Industrial, LLC, (ii) Howell Lendco LLC, (iii) Maspen MS I LLC, (iv) Royaltree Lendco, LLC, (v) Terra 370 Lex, LLC,
(vi) Terra Driggs, LLC, (vii) Terra Walnut Development, LLC, (viii) Vaspen MS I LLC, (ix) XS Maple LLC, (x) Terra
Industrial LLC, (xi) MCM Maxx, LLC, (xii) Terra Mortgage Portfolio I, LLC, (xiii) Terra Income Fund 6, LLC, (xiv) Terra
Mortgage Portfolio II, LLC, (xv) TPT Special Subsidiary, LLC, (xvi) University Park Lendco, LLC, (xvii) the newly-created
special purpose entity which would be created as part of the Supplemental Liquidity Financing, which holds, directly or indirectly, the
capital interests in Boundary Pref LLC, Peachtree Lendco LLC, Fund Financing, LLC, Mavik Revol One Holdings, LLC and New Walnut Member
LLC and (xviii) Wonder Group, Inc., and any proceeds in respect of the foregoing (collectively, the “Shared Collateral”).
Each of (i) Terra East Dallas Industrial, LLC and Dallas — 11333 Pagemill Owner, LLC, (ii) Howell Lendco LLC, (iii) Terra
Mortgage Capital I, LLC and (iv) Terra Mortgage Portfolio II, LLC has initially granted liens on all or substantially all of its
assets (collectively, the “Specific Exchange Notes Collateral” and, collectively with the Shared Collateral and any additional
collateral a lien is granted on from time to time by the Company or any of its subsidiaries, the “Collateral”). However, the
Indenture permits the Company to release the liens on any of the Shared Collateral securing the Exchange Notes (i) in whole, upon
a satisfaction and discharge of the indenture, a legal defeasance or a covenant defeasance of the Exchange Notes, (ii) in whole or
in part, with the consent of the requisite holders in accordance with the relevant provisions of the Indenture, including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, Exchange Notes, (iii) as provided in the Intercreditor Agreement,
solely as to the Shared Collateral, and (iv) upon a sale or other disposition of the Specific Exchange Notes Collateral and the application
of the Net Cash Proceeds (as defined in the Indenture) of such sale or other disposition in accordance with the terms of the Indenture.
The Company
will pay interest on the Exchange Notes monthly, on the last day of each month, beginning July 31, 2026. Interest on the Exchange
Notes will accrue from June 30, 2026, at a rate of 11.00% per annum. The Exchange Notes will mature on July 1, 2027, unless
earlier redeemed or repurchased by the Company in accordance with their terms prior to such date.
The Company
is required to redeem the Exchange Notes in whole or in part upon the consummation of certain asset sales, upon the receipt of certain
extraordinary receipts, upon the Company’s incurrence of certain senior secured indebtedness, with certain Excess Cash Flow (as
defined in the Indenture) amounts, and upon the receipt of proceeds from the repayment of certain assets that secure the Exchange Notes
at a redemption price equal to 102% of the outstanding principal amount of the Exchange Notes to be redeemed plus accrued and unpaid interest
payments otherwise payable thereon for the then-current monthly interest period accrued to, but excluding, the date fixed for redemption.
Prior to
July 1, 2027, the Company may elect to redeem the Exchange Notes in whole or in part at any time, or from time to time, at a redemption
price equal to 102% of the outstanding principal amount of the Exchange Notes to be redeemed plus accrued and unpaid interest payments
otherwise payable thereon for the then-current monthly interest period accrued to, but excluding, the date fixed for redemption.
The Indenture
contains certain covenants that, among other things, limit the Company’s ability to: (i) incur certain additional indebtedness;
(ii) pay Dividends (as defined in the Indenture) (other than for purposes of maintaining REIT tax status), repurchase Capital Interests
(as defined in the Indenture) or pay operating expenses in excess of an agreed upon budget; and (iii) merge or consolidate with another
person.
The Indenture
does not require the Company to offer to purchase the Exchange Notes in connection with a change of control or any other event.
The Indenture
provides for certain events of default, including: (i) the Company’s failure to pay the principal (or premium, if any) of any
Exchange Note when due; (ii) the Company’s failure to pay the interest on any Exchange Note when due and such default is not
cured within 5 days; (iii) the Company remains in breach of any other covenant with respect to the Exchange Notes for 30 days after
receiving a written notice of default stating the Company is in breach; (iv) the occurrence of any of the following: (a) except
as permitted by the Indenture, any Security Document (as defined in the Indenture) or the Intercreditor Agreement ceases for any reason
to be fully enforceable, in each case, on any material portion of the Collateral purported to be covered thereby; (b) except
as permitted by the indenture governing the Exchange Notes, any lien purported to be granted under any Security Document on any material
portion of the Collateral ceases to be a valid, enforceable and perfected lien with the priority required by the Security Documents;
or (c) the Company, or any person acting on its behalf, denies or disaffirms, in any pleading in any court of competent jurisdiction,
any material obligation of the Company’s set forth in or arising under any Security Document; (v) the Company file for bankruptcy
or certain other events of bankruptcy, insolvency or reorganization; and (vi) in the case of certain orders or decrees entered against
the Company under any bankruptcy law, such order or decree remains undischarged or unstayed for a period of 60 days. The events of default
are subject to important exceptions and qualifications, as set forth in the Indenture.
Term Loan
On June 29, 2026,
Subsidiary Holdings II, LLC (“Subsidiary Holdings”), a Delaware limited liability company and a wholly-owned subsidiary of
the Company, entered into a term loan agreement (the “Term Loan Agreement”) with Strategic Yieldco LLC, a Delaware limited
liability company, as lender (“Strategic Yieldco”), pursuant to which Strategic Yieldco provided an initial term commitment
in an aggregate amount of up to $25 million and Subsidiary Holdings borrowed a term loan in an aggregate amount of $25 million (the “Term
Loan”). The proceeds of the Term Loan were distributed by Subsidiary Holdings to the Company as partial funding to repay the TPTA
Notes and to pay the cash portion of the Exchange Offer.
Pursuant to the Term
Loan Agreement, the Company has guaranteed, on an unsecured and limited recourse basis, certain obligations under such Term Loan Agreement.
The Term Loan bears interest at a rate equal to eleven percent (11.00%) per annum, payable in cash in arrears on the last business day
of each calendar quarter. In addition, Subsidiary Holdings paid a non-refundable upfront fee equal to four percent (4.00%) of the amount
of the Term Loan to Strategic Yieldco.
The Term Loan will mature
and become payable on December 29, 2027. The Term Loan is secured by equity interests held by (i) Subsidiary Holdings I, LLC
in Subsidiary Holdings, and (ii) Subsidiary Holdings in Fund Financing, LLC, Peachtree Lendco LLC, Boundary Pref LLC, Mavik Revol
One Holdings LLC, and New Walnut Member LLC. The Term Loan would also be mandatorily payable, with certain exceptions, to the extent Subsidiary
Holdings, or any of its subsidiaries, receives net proceeds in respect of the funds and portfolio investments held by the entities identified
in the preceding sentence from (i) any sale, disposition or transfer of any interest, direct or indirect, therein and (ii) dividends
and other distributions.
The Term Loan Agreement
contains customary covenants with respect to Subsidiary Holdings, which are subject to a number of limitations and exceptions as provided
therein, and contains customary events of default, bankruptcy and insolvency, and remedies provisions.
The above
description of the Indenture, the Exchange Notes and Term Loan Agreement contained in this Item 1.01 is a summary only and is qualified
in its entirety by reference to the Indenture, the Form of Exchange Notes included therein, and the Term Loan Agreement, which are
attached hereto as Exhibits 4.1, 4.2, and 10.1, respectively, and are incorporated herein by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit |
|
Description |
| 4.1 |
|
Indenture, dated as of June 30, 2026,
by and between Terra Property Trust, Inc., and U.S. Bank Trust Company, National Association. |
| 4.2 |
|
Form of 11.00% Senior Secured Notes
due 2027 (included as Exhibit A in Exhibit 4.1 hereto). |
| 10.1 |
|
Term Loan Agreement dated June 29,
2026, by and among Subsidiary Holdings II, LLC, as Borrower, Strategic Yieldco LLC, as Lender, and Alter Domus (US) LLC, as Administrative
Agent and Collateral Agent |
| 104 |
|
Cover Page Interactive Data File (formatted
as inline XBRL) |
Signatures
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| |
TERRA PROPERTY TRUST, INC. |
| |
|
|
| Date: July 2, 2026 |
By: |
/s/ Gregory Pinkus |
| |
Name: |
Gregory Pinkus |
| |
Title: |
Chief Financial Officer |
