Adamas Trust, Inc. 9.600% Senior Notes Due 2031

What they do

Adamas Trust is a REIT that invests in a portfolio of Agency RMBS, business purpose loans, residential loans, and multi-family loans. It also originates business purpose loans through its wholly-owned subsidiary, Constructive Loans, LLC. The company generates income primarily from net interest income on its investment portfolio and from mortgage banking activities.

Revenue drivers

• Agency investments (RMBS and TBAs) — This is the largest asset class, with a portfolio of $7.2 billion as of Q2 2026. It generates interest income from residential mortgage-backed securities guaranteed by GSEs.
• Business purpose loans (BPL-Rental) — This portfolio grew to $2.3 billion in unpaid principal balance and includes loans originated by Constructive. It generates interest income and fee income from origination and securitization.
• Residential loans and mortgage banking activities — The company holds residential loans at fair value and engages in mortgage banking activities, which generated net income of $16.2 million in Q2 2026.

Recent performance

In Q2 2026, Adamas reported GAAP basic EPS of $0.48, up from a loss in prior periods. Book value per share was $10.16, up 1.8% quarter-over-quarter, and adjusted book value per share was $11.05. Total net interest income was $50.2 million, up 3.7% quarter-over-quarter. The company declared a common dividend of $0.27 per share, an 11.5% annualized yield. For the six months ended June 30, 2026, net interest income was $98.6 million compared to $69.5 million in the prior year period.

Strategy

Management is focused on building a larger and more diversified investment platform, expanding its Agency investment portfolio and business purpose loan originations. The company is scaling its Constructive subsidiary to originate more loans and increase securitization activity. It is also managing leverage, with a recourse leverage ratio of 5.5x, and has increased warehouse capacity to $3.7 billion. The company aims to grow earnings and book value through portfolio expansion and capital allocation.

Risks

• Interest rate risk — Interest rate mismatches between assets and borrowings could reduce net income or cause losses in periods of changing rates.
• Market value declines — Declines in the market values of investments could hurt periodic reported results and reduce credit availability.
• Credit risk on subordinated securities — Investments include subordinated tranches of RMBS, CMBS, and ABS, which are subordinate to more senior securities and carry greater risk of loss.
• Concentration risk — The portfolio may become concentrated in certain asset types or geographic areas, increasing exposure to real estate and lending industry downturns.

Outlook

Management expressed confidence in continued growth in earnings, book value, and the investment portfolio. The company raised its common dividend by 17.4% to $0.27 per share. Subsequent to Q2, it priced a $341 million BPL-Rental securitization. The company believes continued execution of its strategy will drive further shareholder value.