ADAMG — Adamas Trust, Inc. - 9.125% Senior Notes Due 2030

Summary of Adamas Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• GAAP Earnings Per Share (EPS): $0.41, a 26% increase quarter-over-quarter.
• Earnings Available for Distribution (EAD): $0.29 per share, up 26% from the previous quarter and 45% year-over-year.
• Dividend: $0.23 per share, indicating a 6.35% economic return on GAAP book value.
• GAAP Book Value: Increased by 4% to $9.98; adjusted book value rose 1.6% to $10.80.
• Net Interest Income: Rose to $48.2 million from $46.3 million in the previous quarter.
• General & Administrative (G&A) Expenses: Decreased slightly to $24.5 million from $25.1 million.

2. Strategic Updates and Business Highlights:

• The company reported strong performance amid a volatile macro environment, driven by geopolitical tensions and monetary policy shifts.
• Investment Strategy: Focused on three pillars: Agency RMBS (56% of equity capital), growth in single-family credit through BPL rental loans, and scaling the Constructive platform.
• Capital Deployment: Over $1 billion in acquisitions during the quarter, with significant investments in BPL rental loans.
• Integration of Constructive: Transitioned from a cost center to a profit contributor, generating $2.5 million in profit for the quarter.
• Securitization Activity: Continued strong performance in the securitization market with plans for 5-6 BPL rental securitizations in 2026.

3. Forward Guidance and Outlook:

• Management remains optimistic about the year ahead, focusing on EAD growth, disciplined investment selection, and capital allocation.
• The company expects to continue capitalizing on market conditions to enhance portfolio growth and maintain a stable earnings profile.
• Future discussions regarding dividend growth will be aligned with sustainable earnings and book value preservation.

4. Bad News, Challenges, or Points of Concern:

• The company’s stock trades at a significant discount (32%) to adjusted book value and 15% to the value of equity capital invested in agencies, indicating a disconnect between market perception and intrinsic value.
• The agency market experienced volatility, with spreads widening due to geopolitical tensions, which could impact future performance.
• The multifamily portfolio experienced a higher-than-average payoff rate (30%), which could affect future cash flows and reinvestment opportunities.

5. Notable Q&A Insights:

• Dividend Coverage: Management is focused on sustainably growing EAD while preserving book value, with ongoing discussions regarding potential dividend increases.
• Book Value Drivers: Gains were attributed to strong portfolio performance and derivative gains, with significant contributions from a property sale in the mezzanine lending portfolio.
• Constructive's Performance: The origination platform is expected to stabilize and grow, with a focus on aligning production with Adamas' investment strategies.
• Market Conditions Impacting Securitizations: Recent pricing for BPL rental securitizations reflects broader market conditions rather than specific deal quality, indicating a responsive approach to market volatility.

Overall, Adamas Trust demonstrated strong financial performance in Q1 2026, navigating a challenging macro environment while positioning itself for future growth through strategic investments and operational efficiencies.