ADAMN — 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; 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.