Series C Preferred Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Series C Preferred Equity

9. Series C Preferred Equity

On April 19, 2024, the Company entered into Amendment No. 4 to the Second Amended and Restated Limited Liability Company Agreement (“Fourth Amendment”) with an effective date of March 31, 2024 to effect a 100-for-1 unit split of its Series C cumulative preferred units (“Series C Preferred Units”) that became effective March 31, 2024. As a result of the split, every Series C Preferred Unit, issued and outstanding immediately prior to March 31, 2024 will automatically be reclassified (without any further act) into one hundred Series C Preferred Units.

The Fourth Amendment also increased the maximum number of authorized Series C Preferred Units to 20,000, of which 8,000 are to be issued only pursuant to the Preferred Unit Reinvestment Program. In addition, pursuant to the Fourth Amendment, after six years from the date of investment, instead of being entitled to the right of redemption, the holders of Series C Preferred Units will be entitled to convert all or a portion of the Series C Preferred Units to the common units of the Registrant, on a 1 for 1 basis, after a 12-month waiting period after the notice of conversion is given.

In addition, the Fourth Amendment restricted the right to require the Company to redeem the Series C Preferred Units for cash; therefore, the units were reclassified from mezzanine equity to Members’ Capital. The Company’s redeemable Series C preferred equity was $4,773 as of December 31, 2023. The Company’s redeemable Series C preferred equity was $6,189 as of June 30, 2024.

The Series C Preferred Units have a fixed value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions of 12% of the Series C Preferred Units’ value will be made on a quarterly basis.

Roll forward of Series C Preferred Equity:

	Six Months Ended June 30, 2024			Year Ended December 31, 2023			Six Months Ended June 30, 2023
Beginning balance	$	4,773		$	5,725		$	5,725
Additions from new investment		1,200			-			-
Distributions		(112	)		(1,539	)		(1,251	)
Additions from reinvestments		328			587			301
Ending balance	$	6,189		$	4,773		$	4,775

The following table shows the earliest conversion options for investors in Series C Preferred Equity as of June 30, 2024:

Year Maturing	Total Amount Convertible
2024	$	2,595
2025		542
2026		309
2027		1,299
2028		206
2029 and thereafter		1,238
Total	$	6,189