ADAMM — Adamas Trust, Inc.

Summary of Adamas Trust Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $41.6 million, or $0.46 per share.
• Earnings Available for Distribution (EAD): $0.23 per share, fully covering the quarterly dividend.
• Economic Return: 6.85% on GAAP book value and 4.62% on adjusted book value for Q4; 12.72% and 11.01% for the full year 2025.
• Investment Portfolio: Expanded to $3.1 billion, with a 44% year-over-year increase in EAD.
• Dividends: 15% increase in common dividend.
• Book Value: GAAP book value increased by 4.3% and adjusted book value by 2.4% in Q4.

2. Strategic Updates and Business Highlights

• Acquisition of Constructive: Full acquisition of Constructive, a business purpose loan originator, is expected to enhance earnings through stable spread income and scalable origination economics.
• Portfolio Strategy: Increased allocation to Agency RMBS, which now constitutes 63% of the investment portfolio, up from 23% a year earlier.
• Operational Efficiency: Integration of Constructive is ongoing, with expectations of improved earnings contributions as efficiencies are realized.
• Securitization Activity: Completed four securitizations in 2025, with plans for one BPL-Rental deal per quarter moving forward.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate continued growth in EAD and adjusted book value, with a target of 60-70% of equity capital allocated to Agency RMBS.
• Market Conditions: Positive outlook due to the Fed's easing cycle and government policies aimed at improving housing affordability.
• Earnings Growth: Expect Constructive's DSCR originations to contribute positively to earnings in Q1 2026.

4. Bad News, Challenges, or Points of Concern

• Integration Costs: Ongoing integration of Constructive is expected to incur additional costs, impacting short-term earnings.
• EAD Decline: Slight decline in EAD from the previous quarter, attributed to integration-related costs rather than structural earnings pressure.
• Market Discounts: Shares traded at a 31% discount to book value, indicating market skepticism about the value of non-Agency and multifamily holdings.
• Competition: Increased competition in the business purpose lending space could pressure margins, although Constructive is well-positioned to navigate this.

5. Notable Q&A Insights

• Capital Deployment: Management indicated a balanced approach between scaling Constructive's originations and increasing Agency investments, with a focus on achieving mid- to high teens returns.
• Integration Costs: Expected to moderate over time, with a run rate for G&A expenses related to Constructive estimated at 7-7.5% of stockholders' equity.
• Borrower Profile: Constructive primarily serves individual investors, which may benefit from potential institutional bans on single-family rentals.
• Share Repurchases: No share repurchases were made in Q4; management remains cautious about using capital for repurchases versus investment opportunities.

This summary encapsulates the key points from Adamas Trust's Q4 2025 earnings call, highlighting financial performance, strategic direction, future outlook, and challenges faced by the company.