ADAMZ — Adamas Trust, Inc. 7.000% Series G Cumulative Redeemable Preferred Stock

Summary of ADAMZ Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Distribution Amount (EDA): Increased to $0.24 per share, up from $0.22 in Q2, marking the sixth consecutive quarterly increase.
• Dividend: Raised to $0.23 per share.
• Investment Portfolio: Grew to $10.4 billion from $8.6 billion in the previous quarter, driven by a record net investment activity of $1.8 billion (20% increase).
• Adjusted Net Interest Income: Rose 7% quarter-over-quarter and 47% year-over-year to $0.47 per share.
• Net Interest Spread: Stable at 150 basis points.
• GAAP Book Value: $9.20 per share; Adjusted Book Value: $10.38 per share, reflecting increases of 1% and 1.2%, respectively.
• Leverage Ratios: Recourse leverage ratio increased to 5x; portfolio recourse leverage to 4.7x, primarily due to financing activities.

2. Strategic Updates and Business Highlights

• Rebranding: Transitioned to Adamas Trust, symbolizing strength and durability.
• Capital Rotation Strategy: Increased allocation to Agency RMBS, now representing 57% of total capital, nearly tripling from a year ago.
• Acquisition of Constructive: Completed the acquisition of the remaining 50% interest in Constructive, a business purpose loan platform, enhancing control over origination and product development.
• BPL Rental Loans: Grew to $1.16 billion, reflecting a 24% quarter-over-quarter increase, positioning this segment as a core growth strategy.
• Securitization Activity: Successfully priced two securitizations totaling $645 million, benefiting from favorable market conditions.

3. Forward Guidance and Outlook

• Earnings Growth: Management anticipates continued improvement in recurring earnings, supported by a full quarter of interest income and the integration of Constructive.
• Capital Allocation: Future capital deployment will be more measured, balancing between agency and credit investments based on market conditions.
• Book Value: Expected to increase by 2.5% to 3% as of late October.

4. Bad News, Challenges, or Points of Concern

• Regulatory Risks: Potential developments with GSEs could impact capital allocation and credit availability, though management is not currently planning for significant changes.
• Market Competition: Increased competition in the BPL bridge market is pressuring purchase volumes and pass-through rates, leading to a deliberate reduction in acquisition volumes.
• Integration Costs: Constructive reported a net loss of $3.8 million due to transitional integration costs, which are expected to decline over time.

5. Notable Q&A Insights

• Capital Allocation Strategy: Management emphasized a flexible approach to capital allocation, considering both agency and credit opportunities without a fixed ratio.
• Share Repurchase Considerations: While share repurchases were utilized in previous quarters, management is cautious about the long-term impact of equity shrinkage and prioritizes asset opportunities.
• Payoff Rates: The mezzanine portfolio is expected to maintain elevated payoff rates, potentially exceeding historical averages due to portfolio seasoning and borrower engagement.

Overall, Adamas Trust demonstrated strong financial performance and strategic growth initiatives in Q3 2025, while navigating competitive pressures and regulatory uncertainties.