NEW YORK, Oct. 29, 2025 (GLOBE NEWSWIRE) -- Adamas Trust, Inc. (Nasdaq: ADAM) ("Adamas," the "Company," "we," "our" or "us") today reported results for the three and nine months ended September 30, 2025.
Summary of Third Quarter 2025:
(dollar amounts in thousands, except per share data)
Net income attributable to Company's common stockholders $ 32,702
Net income attributable to Company's common stockholders
per share (basic) $ 0.36
Earnings available for distribution attributable to
Company's common stockholders (1) $ 21,991
Earnings available for distribution per common share
(1) $ 0.24
Yield on average interest earning assets (1) (2) 6.33%
Interest income $160,633
Interest expense $124,047
Net interest income $ 36,586
Net interest spread (1) (3) 1.50%
Book value per common share at the end of the period $ 9.20
Adjusted book value per common share at the end of
the period (1) $ 10.38
Economic return on book value (4) 3.51%
Economic return on adjusted book value (5) 3.41%
Dividends per common share $ 0.23
(1) Represents a non-GAAP financial measure. A reconciliation
of the Company's non-GAAP financial measures to their
most directly comparable GAAP measure is included
below in "Reconciliation of Financial Information."
(2) Calculated as the quotient of our adjusted interest
income and our average interest earning assets and
excludes all Consolidated SLST assets other than those
securities owned by the Company.
(3) Our calculation of net interest spread may not be
comparable to similarly-titled measures of other companies
who may use a different calculation.
(4) Economic return on book value is based on the periodic
change in GAAP book value per common share plus dividends
declared per common share, if any, during the period.
(5) Economic return on adjusted book value is based on
the periodic change in adjusted book value per common
share, a non-GAAP financial measure, plus dividends
declared per common share, if any, during the period.
Key Developments:
Investing Activities
-- Acquired approximately $1.8 billion of Agency investments with an average
coupon of 5.27%.
-- Acquired approximately $525.7 million in residential loans with an
average gross coupon of 8.81%.
-- Exited remaining joint venture equity investments at their approximate
carrying value of $17.0 million.
-- Received approximately $26.4 million in proceeds from redemptions of
Mezzanine Lending investments.
-- Acquired the outstanding 50% ownership interests in Constructive Loans,
LLC ("Constructive") that were not previously owned by the Company
through the consummation of a membership interest purchase agreement.
Financing Activities
-- Completed the issuance of $115.0 million in aggregate principal amount of
our 9.875% Senior Notes due 2030 in underwritten public offerings. The
total proceeds to us from the offerings of the notes, after deducting the
underwriters' discount and commissions and offering expenses, as
applicable, were approximately $111.4 million.
-- Completed two securitizations of residential loans, resulting in
approximately $619.2 million in net proceeds to us after deducting
expenses associated with the transactions. We utilized a portion of the
net proceeds to redeem two residential loan securitizations and to repay
approximately $270.5 million on outstanding repurchase agreements related
to residential loans.
-- Increased common stock dividend declared in September 2025 to $0.23 per
common share.
Management Overview
Jason Serrano, Chief Executive Officer, commented: "The third quarter was an active and strategically significant period for Adamas. We marked the Company's recent rebranding with its highest level of quarterly investment activity since inception, expanding the investment portfolio by $1.8 billion. The momentum generated from our disciplined and deliberate capital rotation that focuses on assets with greater earnings durability has allowed for a meaningful increase in the Company's quarterly dividend. Additionally, we deepened relationships across the investment ecosystem in the quarter with our acquisition of the remaining 50% interest in a market leading business purpose loan origination platform. Together, these initiatives drove earnings available for distribution higher for the sixth consecutive quarter, reinforcing our commitment to long-term value creation for our stockholders."
Capital Allocation
The following table sets forth our allocated capital at September 30, 2025 (dollar amounts in thousands):
Investment
Portfolio Corporate/
((1) Constructive Other Total
------------ -------------- ---------- --------------
Investment securities
available for sale and
TBAs (2) $ 6,869,358 $ -- $ -- $ 6,869,358
Residential loans 4,096,213 55,434 -- 4,151,647
Consolidated SLST CDOs (1,016,952) -- -- (1,016,952)
Residential loans held
for sale -- 105,036 -- 105,036
Multi-family loans 68,647 -- -- 68,647
Equity investments 28,825 -- -- 28,825
Equity investments in
consolidated
multi-family properties
(3) 157,385 -- -- 157,385
Equity investments in
disposal group held for
sale (4) 678 -- -- 678
Single-family rental
properties 131,984 -- -- 131,984
Mortgage servicing
rights 21,835 61 -- 21,896
---------- --------- -------- ----------
Total investments 10,357,973 160,531 -- 10,518,504
Liabilities:
Repurchase
agreements,
warehouse facilities
and TBA cost basis
(5) (6,363,494) (148,341) -- (6,511,835)
Collateralized debt
obligations
Residential loan
securitization
CDOs (2,493,745) -- -- (2,493,745)
Non-Agency RMBS
re-securitization (66,762) -- -- (66,762)
Senior unsecured
notes -- -- (356,865) (356,865)
Subordinated
debentures -- -- (45,000) (45,000)
Cash, cash equivalents
and restricted cash
(6) 104,964 15,400 174,204 294,568
Goodwill -- 22,396 22,396
Cumulative adjustment of
redeemable
non-controlling
interest to estimated
redemption value (54,782) -- -- (54,782)
Other 122,686 15,410 (53,798) 84,298
---------- --------- -------- ----------
Net Company capital
allocated $ 1,606,840 $ 65,396 $(281,459) $ 1,390,777
========== ========= ======== ==========
Company Recourse 5.0 x
Leverage Ratio (7)
----------
Portfolio Recourse 4.7 x
Leverage Ratio (8)
----------
(1) The Company, through its ownership of certain securities,
has determined it is the primary beneficiary of Consolidated
SLST and has consolidated the assets and liabilities
of Consolidated SLST in the Company's condensed consolidated
financial statements. Consolidated SLST is primarily
presented on our condensed consolidated balance sheets
as residential loans, at fair value and collateralized
debt obligations, at fair value. Our investment in
Consolidated SLST as of September 30, 2025 was limited
to the RMBS comprised of first loss subordinated securities
and certain IOs issued by the respective securitizations
with an aggregate net carrying value of $158.8 million.
(2) Includes implied fair value of outstanding TBAs of
$30.6 million. TBAs are recorded as derivative instruments
in the Company's condensed consolidated financial
statements. As of September 30, 2025, our TBAs had
a net carrying value of $0.1 million reported in other
liabilities on the Company's condensed consolidated
balance sheets. The net carrying value represents
the difference between the implied fair value of the
underlying security in the TBA contract and the price
to be paid or received for the underlying security
(or cost basis).
(3) Represents the Company's equity investments in consolidated
multi-family properties that are not in disposal group
held for sale. See "Reconciliation of Financial Information"
section below for a reconciliation of equity investments
in consolidated multi-family properties and disposal
group held for sale to the Company's condensed consolidated
financial statements.
(4) Represents the Company's equity investments in multi-family
properties that are held for sale in disposal group.
See "Reconciliation of Financial Information" section
below for a reconciliation of equity investments in
consolidated multi-family properties and disposal
group held for sale to the Company's condensed consolidated
financial statements.
(5) Includes repurchase agreements and warehouse facilities
with a carrying value of $6.5 billion and outstanding
TBAs with a cost basis of $30.8 million.
(6) Excludes cash in the amount of $4.0 million held in
the Company's equity investments in consolidated multi-family
properties and equity investments in consolidated
multi-family properties in disposal group held for
sale. Restricted cash of $112.4 million is included
in the Company's accompanying condensed consolidated
balance sheets in other assets.
(7) Represents the Company's total outstanding recourse
repurchase agreement and warehouse facility financing,
senior unsecured notes, subordinated debentures, and
cost basis of outstanding TBAs divided by the Company's
total stockholders' equity. Does not include Consolidated
SLST CDOs amounting to $1.0 billion, residential loan
securitization CDOs amounting to $2.5 billion, non-Agency
RMBS re-securitization CDOs amounting to $66.8 million
and mortgages payable on real estate totaling $362.7
million as they are non-recourse debt.
(8) Represents the Company's outstanding recourse repurchase
agreement and warehouse facility financing and cost
basis of outstanding TBAs divided by the Company's
total stockholders' equity.
Net Interest Spread
The following table sets forth certain information about our interest earning assets by category and their related adjusted interest income, adjusted interest expense, adjusted net interest income (loss), yield on average interest earning assets, average financing cost and net interest spread for the three months ended September 30, 2025 (dollar amounts in thousands):
Three Months Ended September 30, 2025
Single-Family Multi-Family Corporate/
Agency Credit Credit Other Total
-------------- ----------------- ---------------- ------------- --------------
Adjusted
Interest
Income (1)
(2) $ 86,041 $ 59,305 $ 2,124 $ 2,030 $ 149,500
Adjusted
Interest
Expense
(1) (55,268) (41,377) -- (10,103) (106,748)
--------- --------- ------- --- -------- ---------
Adjusted Net
Interest
Income
(Loss) (1) $ 30,773 $ 17,928 $ 2,124 $ (8,073) $ 42,752
========= ========= ======= === ======== =========
Average
Interest
Earning
Assets (3) $5,873,080 $ 3,333,917 $ 71,026 $ 172,958 $9,450,981
Average
Interest
Bearing
Liabilities
(4) $5,300,885 $ 2,902,470 $ -- $ 561,681 $8,765,036
Yield on
Average
Interest
Earning
Assets (1)
(5) 5.86% 7.12% 11.96% 4.69% 6.33%
Average
Financing
Cost (1)
(6) (4.14)% (5.66)% -- (7.14)% (4.83)%
---------- ------------- ------- --- --------- ----------
Net Interest
Spread (1)
(7) 1.72% 1.46% 11.96% (2.45)% 1.50%
========= ========= ======= ========= =========
(1) Represents a non-GAAP financial measure. A reconciliation
of the Company's non-GAAP financial measures to their
most directly comparable GAAP measure is included
below in "Reconciliation of Financial Information."
(2) Includes interest income earned on cash accounts held
by the Company.
(3) Average Interest Earning Assets for the period include
residential loans, residential loans held for sale,
multi-family loans and investment securities and cost
basis of outstanding TBAs and exclude all Consolidated
SLST assets other than those securities owned by the
Company. Average Interest Earning Assets is calculated
based on the daily average amortized cost for the
period.
(4) Average Interest Bearing Liabilities for the period
include repurchase agreements and warehouse facilities,
residential loan securitization and non-Agency RMBS
re-securitization CDOs, senior unsecured notes and
subordinated debentures and exclude Consolidated SLST
CDOs and mortgages payable on real estate as the Company
does not directly incur interest expense on these
liabilities that are consolidated for GAAP purposes.
Average Interest Bearing Liabilities is calculated
based on the daily average outstanding balance for
the period.
(5) Yield on Average Interest Earning Assets is calculated
by dividing our annualized adjusted interest income
relating to our portfolio of interest earning assets
by our Average Interest Earning Assets for the period.
(6) Average Financing Cost is calculated by dividing our
annualized adjusted interest expense by our Average
Interest Bearing Liabilities.
(7) Net Interest Spread is the difference between our
Yield on Average Interest Earning Assets and our Average
Financing Cost.
Segment Information
The following tables present summarized financial information by reportable segment for the three and nine months ended September 30, 2025, respectively, which in total reconciles to the same data for the Company on a consolidated basis (dollar amounts in thousands):
For the Three Months Ended September 30, 2025
-----------------------------------------------------------
Investment Corporate/
Portfolio Constructive Other Total
-------------- ---------------- ------------ -----------
Total net
interest income
(loss) $ 45,023 $ 124 $ (8,561) $ 36,586
Total net loss
from real
estate (3,878) -- -- (3,878)
Total other
income (loss) 41,720 12,162 (5,278) 48,604
Total general,
administrative
and operating
expenses (1) 10,809 16,062 14,954 41,825
------ ------- --- ------- -------
Income (loss)
from
operations
before
income
taxes 72,056 (3,776) (28,793) 39,487
Income tax
expense
(benefit) 12 -- (310) (298)
------ ------- --- ------- -------
Net income
(loss) 72,044 (3,776) (28,483) 39,785
Net loss
attributable to
non-controlling
interests 5,035 -- -- 5,035
------ ------- --- ------- -------
Net income
(loss)
attributable
to Company 77,079 (3,776) (28,483) 44,820
Preferred stock
dividends -- -- (12,118) (12,118)
------ ------- --- ------- -------
Net income
(loss)
attributable
to Company's
common
stockholders $ 77,079 $ (3,776) $ (40,601) $ 32,702
====== ======= ======= =======
For the Nine Months Ended September 30, 2025
Investment Corporate/
Portfolio Constructive Other Total
------------ ---------------- ------------ -----------
Total net
interest income
(loss) $125,987 $ 124 $ (19,980) $106,131
Total net loss
from real
estate (9,126) -- -- (9,126)
Total other
income 57,302 12,162 1,828 71,292
Total general,
administrative
and operating
expenses (1) 27,906 16,062 42,849 86,817
------- ------- --- ------- -------
Income (loss)
from
operations
before
income
taxes 146,257 (3,776) (61,001) 81,480
Income tax
expense 26 -- 163 189
------- ------- --- ------- -------
Net income
(loss) 146,231 (3,776) (61,164) 81,291
Net loss
attributable to
non-controlling
interests 14,231 -- -- 14,231
------- ------- --- ------- -------
Net income
(loss)
attributable
to Company 160,462 (3,776) (61,164) 95,522
Preferred stock
dividends -- -- (36,021) (36,021)
------- ------- --- ------- -------
Net income
(loss)
attributable
to Company's
common
stockholders $160,462 $ (3,776) $ (97,185) $ 59,501
======= ======= ======= =======
(1) General, administrative and operating expenses of
the Constructive segment include $8.0 million of direct
general and administrative expenses and $3.8 million
of direct loan origination costs incurred by Constructive.
Conference Call
On Thursday, October 30, 2025 at 9:00 a.m., Eastern Time, Adamas Trust's executive management is scheduled to host a conference call and audio webcast to discuss the Company's financial results for the three and nine months ended September 30, 2025. To access the conference call, please pre-register using this link. Registrants will receive confirmation with dial-in details. A live audio webcast of the conference call can be accessed, on a listen-only basis, at the Investor Relations section of the Company's website at www.adamasreit.com or using this link. Please allow extra time, prior to the call, to visit the site and download the necessary software to listen to the Internet broadcast. A webcast replay link of the conference call will be available on the Investor Relations section of the Company's website approximately two hours after the call and will be available for 12 months.
In connection with the release of these financial results, the Company will also post a supplemental financial presentation that will accompany the conference call on its website at www.adamasreit.com under the "Investors -- Events and Presentations" section. Third quarter 2025 financial and operating data can be viewed in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. A copy of the Form 10-Q will be posted at the Company's website as soon as reasonably practicable following its filing with the Securities and Exchange Commission.
About Adamas Trust
Adamas Trust, Inc. is an internally managed real estate investment trust ("REIT") focused on strategically deploying capital across complementary businesses to generate durable earnings and long-term value for stockholders through disciplined portfolio management and an operating platform designed to capture opportunities across real estate and capital markets. For a list of defined terms used from time to time in this press release, see "Defined Terms" below.
Defined Terms
The following defines certain of the commonly used terms that may appear in this press release: "Constructive" refers to Constructive Loans, LLC, the Company's wholly-owned origination platform; "RMBS" refers to residential mortgage-backed securities backed by adjustable-rate, hybrid adjustable-rate, or fixed-rate residential loans; "Agency RMBS" refers to RMBS representing interests in or obligations backed by pools of residential loans guaranteed by a government sponsored enterprise ("GSE"), such as the Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"), or an agency of the U.S. government, such as the Government National Mortgage Association ("Ginnie Mae"); "TBAs" refers to to-be-announced securities that are forward contracts for the purchase or sale of Agency fixed-rate RMBS at a predetermined price, face amount, issuer, coupon, and stated maturity on an agreed-upon future date; "Agency investments" refer to Agency RMBS and TBAs; "TBA dollar roll income" refers to the difference in price between two TBA contracts with the same terms but different settlement dates that are simultaneously bought and sold; "non-Agency RMBS" refers to RMBS that are not guaranteed by any agency of the U.S. Government or any GSE; "IOs" refers collectively to interest only and inverse interest only mortgage-backed securities that represent the right to the interest component of the cash flow from a pool of mortgage loans; "POs" refers to mortgage-backed securities that represent the right to the principal component of the cash flow from a pool of mortgage loans; "CDO" refers to collateralized debt obligation and includes debt that permanently finances the residential loans held in Consolidated SLST, the Company's residential loans held in securitization trusts and a non-Agency RMBS re-securitization that we consolidate or consolidated in our financial statements in accordance with GAAP; "Consolidated SLST" refers to Freddie Mac-sponsored residential loan securitizations, comprised of seasoned re-performing and non-performing residential loans, of which we own the first loss subordinated securities and certain IOs, that we consolidate in our financial statements in accordance with GAAP; "Consolidated VIEs" refers to variable interest entities ("VIE") where the Company is the primary beneficiary, as it has both the power to direct the activities that most significantly impact the economic performance of the VIE and a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE and that we consolidate in our financial statements in accordance with GAAP; "Consolidated Real Estate VIEs" refers to Consolidated VIEs that own multi-family properties; "business purpose loans" refers to (i) short-term loans that are collateralized by residential properties and are made to investors who intend to rehabilitate and sell the residential property for a profit or (ii) loans that finance (or refinance) non-owner occupied residential properties that are rented to one or more tenants; "Mezzanine Lending" refers, collectively, to preferred equity and mezzanine loan investments in multi-family properties; "Multi-Family Credit" includes Mezzanine Lending and certain equity investments in multi-family assets, including joint venture equity investments; "Single-Family Credit" includes residential loans, residential loans held for sale, non-Agency RMBS and single-family rental properties; and "Corporate/Other" includes, or included, other investment securities and an equity investment in an entity that originates residential loans.
Cautionary Statement Regarding Forward-Looking Statements
When used in this press release, in future filings with the Securities and Exchange Commission (the "SEC") or in other written or oral communications, statements which are not historical in nature, including those containing words such as "will," "believe," "expect," "anticipate, " "estimate," "plan," "continue," "intend," "could," "would," "should," "may" or similar expressions, are intended to identify "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, as such, may involve known and unknown risks, uncertainties and assumptions.
Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results and outcomes could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation: changes in the Company's business and investment strategy; inflation and changes in interest rates and the fair market value of the Company's assets, including negative changes resulting in margin calls relating to the financing of the Company's assets; changes in credit spreads; changes in the long-term credit ratings of the U.S., Fannie Mae, Freddie Mac, and Ginnie Mae; general volatility of the markets in which the Company invests; changes in prepayment rates on the loans the Company owns or that underlie the Company's investment securities; increased rates of default, delinquency or vacancy and/or decreased recovery rates on or at the Company's assets; the Company's ability to identify and acquire targeted assets, including assets in its investment pipeline; the Company's ability to dispose of assets from time to time on terms favorable to it; changes in relationships with the Company's financing counterparties and the Company's ability to borrow to finance its assets and the terms thereof; changes in the Company's relationships with and/or the performance of its operating partners; the Company's ability to predict and control costs; changes in laws, regulations or policies affecting the Company's business; the Company's ability to make distributions to its stockholders in the future; the Company's ability to maintain its qualification as a REIT for U.S. federal income tax purposes; the Company's ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended; impairments and declines in the value of the collateral underlying the Company's investments; changes in the benefits the Company anticipates from the acquisition of Constructive; the Company's ability to effectively integrate Constructive into the Company and the risks associated with the ongoing operation thereof; the Company's ability to manage or hedge credit risk, interest rate risk, and other financial and operational risks; the Company's exposure to liquidity risk, risks associated with the use of leverage, and market risks; and risks associated with investing in real estate assets and/or operating companies, including changes in business conditions and the general economy, the availability of investment opportunities and conditions in markets for residential loans, mortgage-backed securities, structured multi-family investments and other assets that the Company owns or in which the Company invests.
These and other risks, uncertainties and factors, including the risk factors and other information described in the Company's reports filed with the SEC pursuant to the Exchange Act, could cause the Company's actual results to differ materially from those projected in any forward-looking statements the Company makes. All forward-looking statements speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect the Company. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For Further Information
CONTACT: AT THE COMPANY
Phone: 212-792-0107
Email: InvestorRelations@adamasreit.com
FINANCIAL TABLES FOLLOW
ADAMAS TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)
September 30, December 31,
2025 2024
--------------- --------------
(unaudited)
ASSETS
Investment securities available for
sale, at fair value $ 6,838,715 $ 3,828,544
Residential loans, at fair value 4,151,647 3,841,738
Residential loans held for sale, at
fair value 105,036 --
Multi-family loans, at fair value 68,647 86,192
Equity investments, at fair value 28,825 113,492
Cash and cash equivalents 185,285 167,422
Real estate, net 601,748 623,407
Assets of disposal group held for sale 1,383 118,613
Goodwill 22,396 --
Other assets 398,180 437,874
---------- ----------
Total Assets (1) $ 12,401,862 $ 9,217,282
========== ==========
LIABILITIES AND EQUITY
Liabilities:
Repurchase agreements and warehouse
facilities $ 6,481,072 $ 4,012,225
Collateralized debt obligations
($3,202,295 at fair value and $375,164
at amortized cost, net as of September
30, 2025 and $2,135,680 at fair value
and $842,764 at amortized cost, net as
of December 31, 2024) 3,577,459 2,978,444
Senior unsecured notes ($257,590 at
fair value and $99,275 at amortized
cost, net as of September 30, 2025 and
$60,310 at fair value and $98,886 at
amortized cost, net as of December 31,
2024) 356,865 159,196
Subordinated debentures 45,000 45,000
Mortgages payable on real estate, net 362,747 366,606
Liabilities of disposal group held for
sale 78 97,065
Other liabilities 173,863 147,612
---------- ----------
Total liabilities (1) 10,997,084 7,806,148
---------- ----------
Commitments and Contingencies
Redeemable Non-Controlling Interest in
Consolidated Variable Interest
Entities 13,713 12,359
Stockholders' Equity:
Preferred stock, par value $0.01 per
share, 31,500,000 shares authorized,
22,385,674 and 22,164,414 shares
issued and outstanding as of September
30, 2025 and December 31, 2024,
respectively ($559,642 and $554,110
aggregate liquidation preference as of
September 30, 2025 and December 31,
2024, respectively) 540,472 535,445
Common stock, par value $0.01 per
share, 200,000,000 shares authorized,
90,307,776 and 90,574,996 shares
issued and outstanding as of September
30, 2025 and December 31, 2024,
respectively 903 906
Additional paid-in capital 2,279,204 2,289,044
Accumulated other comprehensive loss -- --
Accumulated deficit (1,429,802) (1,430,675)
---------- ----------
Company's stockholders' equity 1,390,777 1,394,720
---------- ----------
Non-controlling interests 288 4,055
---------- ----------
Total equity 1,391,065 1,398,775
---------- ----------
Total Liabilities and Equity $ 12,401,862 $ 9,217,282
========== ==========
(1) Our condensed consolidated balance sheets include
assets and liabilities of consolidated variable interest
entities ("VIEs") as the Company is the primary beneficiary
of these VIEs. As of September 30, 2025 and December
31, 2024, assets of consolidated VIEs totaled $4,478,542
and $3,988,584, respectively, and the liabilities
of consolidated VIEs totaled $3,981,131 and $3,477,211,
respectively.
ADAMAS TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(unaudited)
For the Three Months For the Nine Months Ended
Ended September 30, September 30,
-------------------- -------------------------
2025 2024 2025 2024
--------- --------- ------------ -----------
NET INTEREST INCOME:
Interest income $160,633 $108,361 $431,268 $283,027
Interest expense 124,047 88,124 325,137 225,883
------- ------- ------- -------
Total net
interest
income 36,586 20,237 106,131 57,144
------- ------- ------- -------
NET LOSS FROM REAL
ESTATE:
Rental income 16,600 26,382 51,940 90,353
Other real estate
income 2,504 5,521 8,457 16,093
------- ------- ------- -------
Total income from
real estate 19,104 31,903 60,397 106,446
------- ------- ------- -------
Interest expense,
mortgages payable
on real estate 5,409 12,676 17,298 49,996
Depreciation and
amortization 5,936 8,131 17,759 32,942
Other real estate
expenses 11,637 18,591 34,466 60,476
------- ------- ------- -------
Total expenses
related to real
estate 22,982 39,398 69,523 143,414
------- ------- ------- -------
Total net loss
from real
estate (3,878) (7,495) (9,126) (36,968)
------- ------- ------- -------
OTHER INCOME (LOSS):
Realized losses,
net (5,610) (1,380) (50,481) (19,404)
Unrealized gains,
net 54,852 96,949 197,670 41,046
(Losses) gains on
derivative
instruments, net (13,006) (60,640) (86,774) 4,042
Mortgage banking
activities, net 14,103 -- 14,103 --
(Loss) income from
equity
investments (1,595) 6,054 567 10,026
Impairment of real
estate (1,619) (7,823) (9,437) (48,142)
Loss on
reclassification
of disposal group -- -- -- (14,636)
Other income 1,479 19,715 5,644 16,541
------- ------- ------- -------
Total other
income (loss) 48,604 52,875 71,292 (10,527)
------- ------- ------- -------
GENERAL,
ADMINISTRATIVE AND
OPERATING EXPENSES:
General and
administrative
expenses 23,349 11,941 47,549 36,643
Portfolio operating
expenses 6,747 8,531 21,307 23,672
Loan origination
costs 3,788 -- 3,788 --
Financing
transaction costs 7,941 2,354 14,173 10,452
------- ------- ------- -------
Total general,
administrative
and operating
expenses 41,825 22,826 86,817 70,767
------- ------- ------- -------
INCOME (LOSS) FROM
OPERATIONS BEFORE
INCOME TAXES 39,487 42,791 81,480 (61,118)
Income tax (benefit)
expense (298) 2,325 189 2,556
------- ------- ------- -------
NET INCOME (LOSS) 39,785 40,466 81,291 (63,674)
Net loss attributable
to non-controlling
interests 5,035 2,383 14,231 33,034
------- ------- ------- -------
NET INCOME (LOSS)
ATTRIBUTABLE TO
COMPANY 44,820 42,849 95,522 (30,640)
Preferred stock
dividends (12,118) (10,439) (36,021) (31,317)
NET INCOME (LOSS)
ATTRIBUTABLE TO
COMPANY'S COMMON
STOCKHOLDERS $ 32,702 $ 32,410 $ 59,501 $(61,957)
======= ======= ======= =======
Basic earnings (loss)
per common share $ 0.36 $ 0.36 $ 0.66 $ (0.68)
Diluted earnings
(loss) per common
share $ 0.36 $ 0.36 $ 0.65 $ (0.68)
Weighted average
shares
outstanding-basic 90,406 90,582 90,437 90,895
Weighted average
shares
outstanding-diluted 91,614 90,586 91,352 90,895
ADAMAS TRUST, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY EARNINGS (LOSS)
(Dollar amounts in thousands, except per share data)
(unaudited)
For the Three Months Ended
--------------------------------------------------------------------
September June 30, March 31, December September
30, 2025 2025 2025 31, 2024 30, 2024
------------ ------------ ------------ ------------ ------------
Interest income $160,633 $140,901 $129,734 $118,253 $108,361
Interest expense 124,047 104,454 96,636 91,542 88,124
Total net
interest
income 36,586 36,447 33,098 26,711 20,237
Total net loss
from real
estate (3,878) (3,014) (2,235) (5,871) (7,495)
Total other
income (loss) 48,604 (9,264) 31,952 (31,710) 52,875
Total general,
administrative
and operating
expenses 41,825 19,890 25,102 20,929 22,826
Income (loss)
from operations
before income
taxes 39,487 4,279 37,713 (31,799) 42,791
Income tax
(benefit)
expense (298) (161) 648 (1,520) 2,325
Net income
(loss) 39,785 4,440 37,065 (30,279) 40,466
Net loss
(income)
attributable to
non-controlling
interests 5,035 4,106 5,090 (1,110) 2,383
Net income
(loss)
attributable to
Company 44,820 8,546 42,155 (31,389) 42,849
Preferred stock
dividends (12,118) (12,032) (11,870) (10,439) (10,439)
Net income
(loss)
attributable to
Company's
common
stockholders 32,702 (3,486) 30,285 (41,828) 32,410
Basic earnings
(loss) per
common share $ 0.36 $ (0.04) $ 0.33 $ (0.46) $ 0.36
Diluted earnings
(loss) per
common share $ 0.36 $ (0.04) $ 0.33 $ (0.46) $ 0.36
Weighted average
shares
outstanding -
basic 90,406 90,324 90,583 90,579 90,582
Weighted average
shares
outstanding -
diluted 91,614 90,324 91,091 90,579 90,586
Yield on average
interest
earning assets
(1) 6.33% 6.48% 6.47% 6.57% 6.69%
Net interest
spread (1) 1.50% 1.50% 1.32% 1.37% 1.32%
Earnings
available for
distribution
attributable to
Company's
common
stockholders
(1) $ 21,991 $ 20,024 $ 18,194 $ 14,178 $ 9,326
Earnings
available for
distribution
per common
share - basic
(1) $ 0.24 $ 0.22 $ 0.20 $ 0.16 $ 0.10
Book value per
common share $ 9.20 $ 9.11 $ 9.37 $ 9.28 $ 9.83
Adjusted book
value per
common share
(1) $ 10.38 $ 10.26 $ 10.43 $ 10.35 $ 10.87
Dividends
declared per
common share $ 0.23 $ 0.20 $ 0.20 $ 0.20 $ 0.20
Dividends
declared per
preferred share
on Series D
Preferred
Stock $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 0.50
Dividends
declared per
preferred share
on Series E
Preferred
Stock $ 0.70 $ 0.69 $ 0.69 $ 0.49 $ 0.49
Dividends
declared per
preferred share
on Series F
Preferred
Stock $ 0.43 $ 0.43 $ 0.43 $ 0.43 $ 0.43
Dividends
declared per
preferred share
on Series G
Preferred
Stock $ 0.44 $ 0.44 $ 0.44 $ 0.44 $ 0.44
(1) Represents a non-GAAP financial measure. A reconciliation
of the Company's non-GAAP financial measures to their
most directly comparable GAAP measure is included
below in "Reconciliation of Financial Information."
Reconciliation of Financial Information
Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this press release includes certain non-GAAP financial measures, including adjusted interest income, adjusted interest expense, adjusted net interest income (loss), yield on average interest earning assets, average financing cost, net interest spread, earnings available for distribution and adjusted book value per common share. Our management team believes that these non-GAAP financial measures, when considered with our GAAP financial statements, provide supplemental information useful for investors as it enables them to evaluate our current performance and trends using the metrics that management uses to operate our business. Our presentation of non-GAAP financial measures may not be comparable to similarly-titled measures of other companies, who may use different calculations. Because these measures are not calculated in accordance with GAAP, they should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP should be carefully evaluated.
Adjusted Net Interest Income (Loss) and Net Interest Spread
Financial results for the Company during a given period include the net interest income earned on our investments, such as residential loans, residential loans held for sale, investment securities and preferred equity investments and mezzanine loans, where the risks and payment characteristics are equivalent to and accounted for as loans (collectively, our "interest earning assets"). Adjusted net interest income (loss) and net interest spread (both supplemental non-GAAP financial measures) are impacted by factors such as our cost of financing, including our hedging costs, and the interest rate that our investments bear. Furthermore, the amount of premium or discount paid on purchased investments and the prepayment rates on investments will impact adjusted net interest income (loss) as such factors will be amortized over the expected term of such investments.
We provide the following non-GAAP financial measures, in total and by investment category, for the respective periods:
-- adjusted interest income -- calculated as our GAAP interest income
reduced by the interest expense recognized on Consolidated SLST CDOs and
adjusted to include TBA dollar roll income,
-- adjusted interest expense -- calculated as our GAAP interest expense
reduced by the interest expense recognized on Consolidated SLST CDOs and
adjusted to include the net interest component of interest rate swaps,
-- adjusted net interest income (loss) -- calculated by subtracting adjusted
interest expense from adjusted interest income,
-- yield on average interest earning assets -- calculated as the quotient of
our adjusted interest income and our average interest earning assets and
excludes all Consolidated SLST assets other than those securities owned
by the Company,
-- average financing cost -- calculated as the quotient of our adjusted
interest expense and the average outstanding balance of our interest
bearing liabilities, excluding Consolidated SLST CDOs and mortgages
payable on real estate, and
-- net interest spread -- calculated as the difference between our yield on
average interest earning assets and our average financing cost.
These measures remove the impact of Consolidated SLST that we consolidate in accordance with GAAP and include both the net interest component of interest rate swaps utilized to hedge the variable cash flows associated with our variable-rate borrowings and dollar roll income associated with TBAs, which are included in (losses) gains on derivative instruments, net in the Company's condensed consolidated statements of operations. With respect to Consolidated SLST, we only include the interest income earned by the Consolidated SLST securities that are actually owned by the Company as the Company only receives income or absorbs losses related to the Consolidated SLST securities actually owned by the Company. We include the net interest component of interest rate swaps in these measures to more fully represent the cost of our financing strategy. We include TBA dollar roll income as it represents the economic equivalent of net interest income on the underlying Agency RMBS over the TBA dollar roll period (interest income less implied financing cost).
We provide the non-GAAP financial measures listed above because we believe these non-GAAP financial measures provide investors and management with additional detail and enhance their understanding of our interest earning asset yields, in total and by investment category, relative to the cost of our financing and the underlying trends within our portfolio of interest earning assets. In addition to the foregoing, our management team uses these measures to assess, among other things, the performance of our interest earning assets in total and by asset, possible cash flows from our interest earning assets in total and by asset, our ability to finance or borrow against the asset and the terms of such financing and the composition of our portfolio of interest earning assets, including acquisition and disposition determinations.
A reconciliation of GAAP interest income to adjusted interest income, GAAP interest expense to adjusted interest expense and GAAP total net interest income (loss) to adjusted net interest income (loss) for the three months ended as of the dates indicated is presented below (dollar amounts in thousands):
September 30, 2025
----------------------------------------------------------------
Single-
Family Multi-Family Corporate/
Agency Credit Credit Other Total
--------- --------- -------------- ------------ ------------
GAAP interest
income $ 85,975 $ 70,504 $ 2,124 $ 2,030 $ 160,633
GAAP interest
expense (60,472) (53,080) -- (10,495) (124,047)
GAAP total net
interest income
(loss) $ 25,503 $ 17,424 $ 2,124 $ (8,465) $ 36,586
======= ======= ==== ======== ======= ========
GAAP interest
income $ 85,975 $ 70,504 $ 2,124 $ 2,030 $ 160,633
Adjusted for:
Consolidated
SLST CDO
interest
expense -- (11,199) -- -- (11,199)
TBA dollar
roll income 66 -- -- -- 66
Adjusted
interest
income $ 86,041 $ 59,305 $ 2,124 $ 2,030 $ 149,500
======= ======= ==== ======== ======= ========
GAAP interest
expense $(60,472) $(53,080) $ -- $ (10,495) $(124,047)
Adjusted for:
Consolidated
SLST CDO
interest
expense -- 11,199 -- -- 11,199
Net interest
benefit of
interest
rate swaps 5,204 504 -- 392 6,100
Adjusted
interest
expense $(55,268) $(41,377) $ -- $ (10,103) $(106,748)
======= ======= ==== ======== ======= ========
Adjusted net
interest income
(loss) (1) $ 30,773 $ 17,928 $ 2,124 $ (8,073) $ 42,752
June 30, 2025
----------------------------------------------------------------
Single-
Family Multi-Family Corporate/
Agency Credit Credit Other Total
--------- --------- -------------- ------------ ------------
GAAP interest
income $ 69,743 $ 67,506 $ 2,203 $ 1,449 $ 140,901
GAAP interest
expense (48,564) (48,637) -- (7,253) (104,454)
------- ------- ---- -------- ------- --------
GAAP total net
interest income
(loss) $ 21,179 $ 18,869 $ 2,203 $ (5,804) $ 36,447
======= ======= ==== ======== ======= ========
GAAP interest
income $ 69,743 $ 67,506 $ 2,203 $ 1,449 $ 140,901
Adjusted for:
Consolidated
SLST CDO
interest
expense -- (8,429) -- -- (8,429)
TBA dollar
roll income 7 -- -- -- 7
------- ------- ---- -------- ------- --------
Adjusted
interest
income $ 69,750 $ 59,077 $ 2,203 $ 1,449 $ 132,479
======= ======= ==== ======== ======= ========
GAAP interest
expense $(48,564) $(48,637) $ -- $ (7,253) $(104,454)
Adjusted for:
Consolidated
SLST CDO
interest
expense -- 8,429 -- -- 8,429
Net interest
benefit of
interest
rate swaps 3,149 183 -- 322 3,654
------- ------- ---- -------- ------- --------
Adjusted
interest
expense $(45,415) $(40,025) $ -- $ (6,931) $ (92,371)
======= ======= ==== ======== ======= ========
Adjusted net
interest income
(loss) (1) $ 24,335 $ 19,052 $ 2,203 $ (5,482) $ 40,108
======= ======= ==== ======== ======= ========
March 31, 2025
---------------------------------------------------------------
Single-
Family Multi-Family Corporate/
Agency Credit Credit Other Total
--------- --------- -------------- ------------ -----------
GAAP interest
income $ 55,668 $ 67,266 $ 2,605 $ 4,195 $129,734
GAAP interest
expense (38,367) (48,308) -- (9,961) (96,636)
------- ------- ---- -------- ------- -------
GAAP total net
interest income
(loss) $ 17,301 $ 18,958 $ 2,605 $ (5,766) $ 33,098
======= ======= ==== ======== ======= =======
GAAP interest
income $ 55,668 $ 67,266 $ 2,605 $ 4,195 $129,734
Adjusted for:
Consolidated
SLST CDO
interest
expense -- (6,964) -- -- (6,964)
------- ------- ---- -------- ------- -------
Adjusted
interest
income $ 55,668 $ 60,302 $ 2,605 $ 4,195 $122,770
======= ======= ==== ======== ======= =======
GAAP interest
expense $(38,367) $(48,308) $ -- $ (9,961) $(96,636)
Adjusted for:
Consolidated
SLST CDO
interest
expense -- 6,964 -- -- 6,964
Net interest
benefit of
interest
rate swaps 2,180 258 -- 674 3,112
------- ------- ---- -------- ------- -------
Adjusted
interest
expense $(36,187) $(41,086) $ -- $ (9,287) $(86,560)
======= ======= ==== ======== ======= =======
Adjusted net
interest income
(loss) (1) $ 19,481 $ 19,216 $ 2,605 $ (5,092) $ 36,210
======= ======= ==== ======== ======= =======
December 31, 2024
---------------------------------------------------------------
Single-
Family Multi-Family Corporate/
Agency Credit Credit Other Total
--------- --------- -------------- ------------ -----------
GAAP interest
income $ 45,054 $ 65,026 $ 2,683 $ 5,490 $118,253
GAAP interest
expense (34,393) (47,054) -- (10,095) (91,542)
------- ------- ---- -------- ------- -------
GAAP total net
interest income
(loss) $ 10,661 $ 17,972 $ 2,683 $ (4,605) $ 26,711
======= ======= ==== ======== ======= =======
GAAP interest
income $ 45,054 $ 65,026 $ 2,683 $ 5,490 $118,253
Adjusted for:
Consolidated
SLST CDO
interest
expense -- (6,563) -- -- (6,563)
------- ------- ---- -------- ------- -------
Adjusted
interest
income $ 45,054 $ 58,463 $ 2,683 $ 5,490 $111,690
======= ======= ==== ======== ======= =======
GAAP interest
expense $(34,393) $(47,054) $ -- $ (10,095) $(91,542)
Adjusted for:
Consolidated
SLST CDO
interest
expense -- 6,563 -- -- 6,563
Net interest
benefit of
interest
rate swaps 4,243 195 -- 1,402 5,840
------- ------- ---- -------- ------- -------
Adjusted
interest
expense $(30,150) $(40,296) $ -- $ (8,693) $(79,139)
======= ======= ==== ======== ======= =======
Adjusted net
interest income
(loss) (1) $ 14,904 $ 18,167 $ 2,683 $ (3,203) $ 32,551
======= ======= ==== ======== ======= =======
September 30, 2024
---------------------------------------------------------------
Single-
Family Multi-Family Corporate/
Agency Credit Credit Other Total
--------- --------- -------------- ------------ -----------
GAAP interest
income $ 43,260 $ 61,351 $ 2,699 $ 1,051 $108,361
GAAP interest
expense (35,116) (47,641) -- (5,367) (88,124)
------- ------- ---------- ------- -------
GAAP total net
interest income
(loss) $ 8,144 $ 13,710 $ 2,699 $ (4,316) $ 20,237
======= ======= ========== ======= =======
GAAP interest
income $ 43,260 $ 61,351 $ 2,699 $ 1,051 $108,361
Adjusted for:
Consolidated
SLST CDO
interest
expense -- (7,375) -- -- (7,375)
------- ------- ---------- ------- -------
Adjusted
interest
income $ 43,260 $ 53,976 $ 2,699 $ 1,051 $100,986
======= ======= ========== ======= =======
GAAP interest
expense $(35,116) $(47,641) $ -- $ (5,367) $(88,124)
Adjusted for:
Consolidated
SLST CDO
interest
expense -- 7,375 -- -- 7,375
Net interest
benefit of
interest
rate swaps 7,542 545 -- 366 8,453
------- ------- ---------- ------- -------
Adjusted
interest
expense $(27,574) $(39,721) $ -- $ (5,001) $(72,296)
======= ======= ========== ======= =======
Adjusted net
interest income
(loss) (1) $ 15,686 $ 14,255 $ 2,699 $ (3,950) $ 28,690
======= ======= ========== ======= =======
(1) Adjusted net interest income (loss) is calculated
by subtracting adjusted interest expense from adjusted
interest income.
Earnings Available for Distribution
Previously, we presented undepreciated earnings (loss) as a supplemental non-GAAP financial measure comparable to GAAP net income (loss) attributable to Company's common stockholders. Commencing with the quarter ended March 31, 2025, we have discontinued disclosure of undepreciated earnings (loss). Beginning with the quarter ended March 31, 2025, we are presenting earnings available for distribution attributable to Company's common stockholders ("EAD") (and by calculation, EAD per common share) as a supplemental non-GAAP financial measure comparable to GAAP net income (loss) attributable to Company's common stockholders.
When presented in prior periods, undepreciated earnings (loss) was calculated as GAAP net income (loss) attributable to Company's common stockholders excluding the Company's share in depreciation expense and lease intangible amortization expense, if any, related to operating real estate, net for which an impairment has not been recognized. Over the past few years, we have executed a strategic repositioning of our business through the disposition of certain joint venture equity investments in multi-family properties and acquisition of assets that expand our interest income levels, such as Agency RMBS and business purpose loans. As a result, we believe EAD provides a clearer indication of the current income generating capacity of the Company's business operations than undepreciated earnings (loss) and we present EAD and EAD per common share as supplemental non-GAAP financial measures.
EAD is defined as GAAP net income (loss) attributable to Company's common stockholders excluding (a) realized and unrealized gains (losses) on our investment portfolio, (b) gains (losses) on derivative instruments (excluding the net interest benefit of interest rate swaps and TBA dollar roll income), (c) impairment of real estate, (d) loss on reclassification of disposal group, (e) other non-recurring gains (losses), (f) depreciation and amortization of operating real estate, (g) non-cash expenses, (h) non-recurring transaction expenses, (i) the income tax effect of non-EAD income (loss) items and (j) EAD attributable to non-controlling interests.
We believe EAD provides management, analysts and investors with additional details regarding our underlying operating results and investment trends by excluding certain unrealized, non-cash or non-recurring components of GAAP net income (loss) in order to provide additional transparency into our operating performance. In addition, EAD serves as a useful indicator for investors in evaluating our performance and facilitates comparisons to industry peers and period to period. EAD should not be utilized in isolation, nor should it be considered as a substitute for or superior to GAAP net income (loss) attributable to Company's common stockholders or GAAP net income (loss) attributable to Company's common stockholders per basic share. Our presentation of EAD may not be comparable to similarly-titled measures of other companies, who may use different calculations. We may add additional reconciling items to our EAD calculation as appropriate.
We view EAD as one measure of our ability to generate income for distribution to common stockholders. EAD is one factor, but not the exclusive factor, that our Board of Directors uses to determine the amount, if any, of dividends on our common stock. Other factors that our Board of Directors may consider when determining the amount, if any, of dividends on our common stock include, among others, our earnings and financial condition, capital requirements, maintenance of our REIT qualification, restrictions on making distributions under Maryland law and such other factors as our Board of Directors deems relevant. EAD should not be considered as an indication of our REIT taxable income, a guaranty of our ability to pay dividends, or as a proxy for the amount of dividends we may pay, as EAD excludes certain items that impact our liquidity.
A reconciliation of GAAP net income (loss) attributable to Company's common stockholders to EAD for the respective periods ended is presented below (amounts in thousands, except per share data):
For the Three Months Ended
--------------------------------------------------------
September June 30, March 31, December September
30, 2025 2025 2025 31, 2024 30, 2024
--------- --------- ---------- --------- -----------
GAAP net income
(loss)
attributable to
Company's common
stockholders $ 32,702 $ (3,486) $ 30,285 $(41,828) $ 32,410
Adjustments:
Realized losses,
net 5,610 3,771 41,100 9,947 1,380
Unrealized
(gains) losses,
net (54,852) (24,614) (118,203) 131,576 (96,949)
Losses (gains)
on derivative
instruments,
net (1) 19,172 30,627 49,914 (86,114) 69,093
Unrealized
losses (gains),
net on equity
investments
(2) 2,860 3,352 1,098 (1,570) 1,097
Impairment of
real estate 1,619 3,913 3,905 733 7,823
Other losses
(gains) (3) 311 (548) (775) (12,263) (21,124)
Depreciation and
amortization of
operating real
estate 5,936 5,928 5,895 6,879 8,131
Non-cash
expenses (4) 2,961 2,561 2,199 2,664 2,531
Transaction
expenses (5) 9,233 1,340 6,317 1,885 2,454
Income tax
effect of
adjustments (336) (173) 486 (1,478) 2,325
EAD adjustments
attributable to
non-controlling
interests (3,225) (2,647) (4,027) 3,747 155
------- ------- -------- ------- -------
Earnings available
for distribution
attributable to
Company's common
stockholders $ 21,991 $ 20,024 $ 18,194 $ 14,178 $ 9,326
======= ======= ======== ======= =======
Weighted average
shares outstanding
- basic 90,406 90,324 90,583 90,579 90,582
GAAP net income
(loss)
attributable to
Company's common
stockholders per
common share -
basic $ 0.36 $ (0.04) $ 0.33 $ (0.46) $ 0.36
EAD per common
share - basic $ 0.24 $ 0.22 $ 0.20 $ 0.16 $ 0.10
(1) Excludes net interest benefit of interest rate swaps
of approximately $6.1 million, $3.7 million, $3.1
million, $5.8 million and $8.5 million for the three
months ended September 30, 2025, June 30, 2025, March
31, 2025, December 31, 2024 and September 30, 2024,
respectively. Also excludes TBA dollar roll income
of approximately $66.2 thousand and $7.0 thousand
for the three months ended September 30, 2025 and
June 30, 2025, respectively.
(2) Included in income from equity investments on the
Company's condensed consolidated statements of operations.
(3) Included in other income on the Company's condensed
consolidated statements of operations and primarily
includes non-recurring items such as gains (losses)
on sales of real estate, gains (losses) on de-consolidation,
gains (losses) on extinguishment of debt, preferred
equity premiums resulting from early redemption, property
loss insurance proceeds and provision for uncollectible
receivables.
(4) Includes stock-based compensation and intangible asset
amortization.
(5) Includes non-recurring expenses such as financing
transaction costs and transaction and/or restructuring
expenses.
Adjusted Book Value Per Common Share
Adjusted book value per common share is a supplemental non-GAAP financial measure calculated by making the following adjustments to GAAP book value: (i) exclude the Company's share of cumulative depreciation and lease intangible amortization expenses related to real estate held at the end of the period for which an impairment has not been recognized, (ii) exclude the cumulative adjustment of redeemable non-controlling interests to estimated redemption value and (iii) adjust our amortized cost liabilities that finance our investment portfolio to fair value.
Our rental property portfolio includes fee simple interests in single-family rental homes and joint venture equity interests in multi-family properties owned by Consolidated Real Estate VIEs. By excluding our share of cumulative non-cash depreciation and amortization expenses related to real estate held at the end of the period for which an impairment has not been recognized, adjusted book value reflects the value, at their undepreciated basis, of our single-family rental properties and joint venture equity investments that the Company has determined to be recoverable at the end of the period.
Additionally, in connection with third party ownership of certain of the non-controlling interests in certain of the Consolidated Real Estate VIEs, we record redeemable non-controlling interests as mezzanine equity on our condensed consolidated balance sheets. The holders of the redeemable non-controlling interests may elect to sell their ownership interests to us at fair value once a year, subject to annual minimum and maximum amount limitations, resulting in an adjustment of the redeemable non-controlling interests to fair value that is accounted for by us as an equity transaction in accordance with GAAP. A key component of the estimation of fair value of the redeemable non-controlling interests is the estimated fair value of the multi-family apartment properties held by the applicable Consolidated Real Estate VIEs. However, because the corresponding real estate assets are not reported at fair value and thus not adjusted to reflect unrealized gains or losses in our condensed consolidated financial statements, the cumulative adjustment of the redeemable non-controlling interests to fair value directly affects our GAAP book value. By excluding the cumulative adjustment of redeemable non-controlling interests to estimated redemption value, adjusted book value more closely aligns the accounting treatment applied to these real estate assets and reflects our joint venture equity investment at its undepreciated basis.
The substantial majority of our remaining assets are financial or similar instruments that are carried at fair value in accordance with the fair value option in our condensed consolidated financial statements. However, unlike our use of the fair value option for these assets, certain CDOs issued by our residential loan securitizations, certain senior unsecured notes and subordinated debentures that finance our investments are carried at amortized cost in our condensed consolidated financial statements. By adjusting these financing instruments to fair value, adjusted book value reflects the Company's net equity in investments on a comparable fair value basis.
We believe that the presentation of adjusted book value per common share provides a useful measure for investors and us as it provides a consistent measure of our value, allows management to effectively consider our financial position and facilitates the comparison of our financial performance to that of our peers.
A reconciliation of GAAP book value to adjusted book value and calculation of adjusted book value per common share as of the dates indicated is presented below (amounts in thousands, except per share data):
September June 30, March 31, December September
30, 2025 2025 2025 31, 2024 30, 2024
----------- ----------- ----------- ----------- -------------
Company's
stockholders'
equity $1,390,777 $1,381,203 $1,401,946 $1,394,720 $1,444,147
Preferred stock
liquidation
preference (559,642) (558,498) (554,110) (554,110) (554,110)
--------- --------- --------- --------- ---------
GAAP book value 831,135 822,705 847,836 840,610 890,037
Add:
Cumulative
depreciation
expense on real
estate (1) 26,357 25,170 22,989 20,837 19,180
Cumulative
amortization of
lease
intangibles
related to real
estate (1) 4,620 4,620 4,620 4,620 4,903
Cumulative
adjustment of
redeemable
non-controlling
interest to
estimated
redemption
value 54,782 49,574 46,011 40,675 48,282
Adjustment of
amortized cost
liabilities to
fair value 20,481 24,153 22,488 30,619 21,961
--------- --------- --------- --------- ---------
Adjusted book value $ 937,375 $ 926,222 $ 943,944 $ 937,361 $ 984,363
========= ========= ========= ========= =========
Common shares
outstanding 90,308 90,314 90,529 90,575 90,579
GAAP book value per
common share (2) $ 9.20 $ 9.11 $ 9.37 $ 9.28 $ 9.83
Adjusted book value
per common share
(3) $ 10.38 $ 10.26 $ 10.43 $ 10.35 $ 10.87
(1) Represents cumulative adjustments for the Company's
share of depreciation expense and amortization of
lease intangibles related to real estate held as of
the end of the period presented for which an impairment
has not been recognized.
(2) GAAP book value per common share is calculated using
the GAAP book value and the common shares outstanding
for the periods indicated.
(3) Adjusted book value per common share is calculated
using the adjusted book value and the common shares
outstanding for the periods indicated.
Equity Investments in Multi-Family Entities
We own joint venture equity investments in entities that own multi-family properties. We determined that these joint venture entities are VIEs and that we are the primary beneficiary of these VIEs, resulting in consolidation of the VIEs, including their assets, liabilities, income and expenses, in our condensed consolidated financial statements with non-controlling interests for the third-party ownership of the joint ventures' membership interests.
The Company repositioned its business through the opportunistic disposition over time of certain of the Company's joint venture equity investments in multi-family properties and reallocation of its capital away from such assets to its targeted assets. Accordingly, as of September 30, 2025, the Company determined that certain joint venture equity investments meet the criteria to be classified as held for sale and the assets and liabilities of the respective Consolidated VIEs are reported in assets and liabilities of disposal group held for sale.
We also own a preferred equity investment in a VIE that owns a multi-family property and for which, as of September 30, 2025, the Company is the primary beneficiary, resulting in consolidation of the assets, liabilities, income and expenses of the VIE in our condensed consolidated financial statements with a non-controlling interest for the third-party ownership of the VIE's membership interests.
A reconciliation of our net equity investments in consolidated multi-family properties and disposal group held for sale to our condensed consolidated financial statements as of September 30, 2025 is shown below (dollar amounts in thousands):
Cash and cash equivalents $ 3,147
Real estate, net 469,764
Assets of disposal group held for sale (1) 1,383
Other assets 16,251
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Total assets $490,545
Mortgages payable on real estate, net $362,747
Liabilities of disposal group held for sale (1) 78
Other liabilities 10,563
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Total liabilities $373,388
Redeemable non-controlling interest in Consolidated
VIEs $ 13,713
Less: Cumulative adjustment of redeemable non-controlling
interest to estimated redemption value (54,782)
Non-controlling interest in Consolidated VIEs (464)
Non-controlling interest in disposal group held for
sale 627
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Net equity investment ((2) () $158,063
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(1) Assets and liabilities of disposal group held for
sale as of September 30, 2025 consisted of assets
and liabilities held by the respective Consolidated
Real Estate VIEs for the conclusion of business operations
after real property sales that occurred during the
three months ended September 30, 2025.
(2) The Company's net equity investment as of September
30, 2025 consists of $157.4 million of net equity
investments in consolidated multi-family properties
and $0.7 million of net equity investments in disposal
group held for sale.
(END) Dow Jones Newswires
October 29, 2025 15:51 ET (19:51 GMT)