Summary of Adamas Trust Q4 2025 Earnings Call

1Key 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; full-year economic returns were 12.72% and 11.01%, respectively.

Investment Portfolio: Expanded to $3.1 billion, with a 44% year-over-year increase in EAD.

Dividends: Common dividend increased by 15% year-over-year.

Book Value: GAAP book value increased by 4.3% and adjusted book value by 2.4% in Q4.

2Strategic Updates and Business Highlights

Acquisition of Constructive: Full acquisition completed, expected to enhance earnings through stable spread income and scalable origination economics.

Agency RMBS Portfolio: Grew by 56% of company capital, now representing 63% of the investment portfolio.

Operational Efficiency: Focus on disciplined capital allocation and active portfolio management, with a strong emphasis on Agency RMBS and BPL-Rental loans.

Constructive's Performance: Originated $474 million in Q4, with a total of $1.8 billion in 2025, primarily in BPL-Rental loans.

3Forward Guidance and Outlook

2026 Expectations: Anticipate continued growth in EAD, with Constructive expected to contribute positively in Q1 2026.

Market Conditions: Favorable macroeconomic environment with expectations of lower rates and tighter spreads, driven by the Fed easing cycle.

Capital Allocation Strategy: Targeting 60% to 70% of equity capital in Agency RMBS, while maintaining flexibility to adapt to market conditions.

4Bad News, Challenges, or Points of Concern

Integration Costs: Ongoing integration costs related to Constructive may impact short-term profitability.

EAD Decline: Slight sequential decline in EAD by $0.01 per share due to integration-related costs, which is expected to be temporary.

Market Valuation: Shares trading at a 31% discount to book value, indicating potential market skepticism about non-Agency and multifamily holdings.

Competitive Pressures: Increased competition in the business purpose lending space, particularly for BPL-Rental loans, could pressure margins.

5Notable Q&A Insights

Capital Deployment: Management emphasized a balanced approach to capital allocation between Agency MBS and residential loans, with a focus on mid- to high-teens returns.

Constructive Integration: Expected to see continued integration costs in Q1 2026, but management remains optimistic about long-term contributions from Constructive.

Market Dynamics: Management noted that potential regulatory changes limiting institutional investors in the rental space could benefit Constructive's business model.

Share Repurchases: No share repurchases were made in Q4; management will consider repurchases based on market conditions and relative value of investment opportunities. Overall, Adamas Trust reported strong financial performance in Q4 2025, driven by strategic acquisitions and a focus on Agency RMBS, while navigating challenges related to integration costs and competitive pressures. The outlook for 2026 remains positive, with expectations for continued growth and profitability.