管理層發言
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Adamas Trust Second Quarter 2026 Results Conference Call. This conference is being recorded on Thursday, July 30, 2026. I would now like to turn the call over to Kristi Mussallem, Investor Relations. Please go ahead.
Good morning, and welcome to the Second Quarter 2026 Earnings Call for Adamas Trust. A press release and supplemental financial presentation with Adamas Trust's Second Quarter 2026 results was released yesterday. Both the press release and supplemental financial presentation are available on the company's website at www.adamasreit.com. Additionally, we are hosting a live webcast of today's call, which you can access in the Events and Presentations section of the company's website. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Adamas Trust believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission. Now at this time, I would like to introduce Jason Serrano, Chief Executive Officer. Jason, please go ahead.
Good morning, everyone, and thank you for joining us to discuss Adamas Trust's Second Quarter 2026 results. Joining me this morning are President Nick Mah and Chief Financial Officer Kristine Nario. Over the past several quarters, we've transformed Adamas into a more diversified mortgage REIT with multiple sources of recurring income. Today, our earnings are supported by three complementary businesses: a high-quality Agency RMBS portfolio, a growing residential credit platform centered on business purpose lending, and Constructive, our vertically integrated origination platform. Our objective is simple: make Adamas a stronger company each sequential quarter. If we continue improving earnings quality, book value stability and operating efficiency quarter after quarter, we believe shareholder value will follow over the long term. As such, the second quarter continued Adamas' strong momentum and capped an excellent first half of 2026. We delivered on another quarter of earnings growth, increased book value and expanded our investment portfolio and continue to make progress on scaling Constructive into a larger contributor to recurring earnings. We accomplished this despite a volatile market environment, including a meaningful bear flattener of the Treasury curve. Through that backdrop, our portfolio continued to perform well, demonstrating the strength of our diversified platform. During the quarter, we generated GAAP earnings of $0.48 per common share and EAD of $0.30 per share. This marks the ninth increase in EAD over the past 10 quarters, demonstrating the consistent earnings momentum we've built across the platform. EAD has now grown 36% year-over-year and exceeds our recently increased quarterly dividend of $0.27 per share. GAAP book value increased 1.8%, while adjusted book value increased 2.3%, marking our fourth consecutive quarter of book value growth despite a challenging market backdrop. We believe the ability to increase recurring earnings and book value through varying market conditions reflects the quality of our portfolio, the effectiveness of our capital allocation strategy and the long-term durability of our business model. Despite broader market rate volatility, the opportunity set remained robust throughout the quarter. We expanded our investment portfolio by more than $800 million to $11.7 billion, representing 36% growth from a year ago and providing an even stronger foundation to support future earnings. Importantly, the growth has not come from chasing volume. Rather, it reflects the disciplined capital allocation approach we've developed over the last 20 years of institutional investment experience. At 61% of our investment portfolio at quarter end, Agency RMBS remains the cornerstone of our balance sheet. Combined with supportive market technicals, the asset class currently provides an attractive carry profile and positions us to generate strong risk-adjusted returns over time. In credit, we continue to see exceptionally strong institutional demand for Constructive high-quality business purpose loans, particularly from insurance investors seeking durable cash flows with attractive structural protections. During the quarter, we added a record $632 million of business purpose loans, primarily sourced through Constructive's origination platform. As markets became more competitive with both whole loan and securitization bids, the value of our vertically integrated origination platform will become increasingly evident. We are particularly encouraged by the market's increasing recognition of Adamas. During the quarter, our share price continued to narrow its discount to book value, extending the progress we've made in closing the valuation gap. Over the past year, our stock has significantly outperformed the broader mortgage REIT index by approximately 46% on a total return basis, as shown in our supplemental materials. While we are pleased with this progress, we believe our shares still do not reflect the intrinsic value of the company. We look forward to continuing to demonstrate the strength of our business through disciplined execution and sustained financial performance during the second half of 2026. Our priorities remain clear: continue expanding recurring earnings through disciplined portfolio growth and further scaling of Constructive, continue growing book value through active portfolio management and continue closing the valuation gap through consistent execution and transparent communication with our investors. We are highly optimistic about the opportunities ahead and believe Adamas is well positioned to continue delivering attractive earnings growth, bringing long-term value. We appreciate the continued confidence of our stockholders and look forward to continuing to execute on our long-term strategy. With that, I'll turn the call over to Nick to discuss our investment portfolio and market activity in greater detail.
Thanks, Jason. We took advantage of the volatility in the second quarter to continue to build our investment portfolio. We purchased almost $1.5 billion of single-family assets, split across $798 million in agencies and $679 million in residential credit. The benefits of our integration with Constructive paired with a robust origination pipeline are becoming increasingly evident with a record quarter of business purpose loan purchases. Given the tightening of agency spreads in the quarter, we see that residential credit has become more attractive on a relative value basis, and we expect that to be reflected in a growing share of our capital allocation into the strategy in the near future. More broadly, we believe that directing incremental capital to the best relative value opportunities across our core strategies while also maintaining an overall diversified portfolio will enhance book value stability over time. In the second quarter, declining rate volatility and a broad-based demand for MBS supported a meaningful tightening in agency spreads. Current coupon spreads to Treasuries tightened from 125 basis points to 107 basis points, and the agency portfolio increased from $6.8 billion to $7.2 billion, driven largely by growth in our TBA book. Our purchases in spec pools in the quarter have been primarily in the 5% and 5.5% coupons. Given current market spreads, we expect that our 56% capital allocation to agencies will remain largely unchanged with new purchases expected to generally offset paydowns in this strategy. Although our core agency strategy revolves around spec pools for better convexity protection, we opportunistically added to our TBA positions this quarter, some of which traded very special during the period. We currently have $664 million of TBAs that we expect to rotate back into spec pools in the future. Agency leverage increased from 7.8x to 8.3x this quarter, consistent with the range we target in managing the portfolio. The increase in leverage reflected both higher investment activity and a larger TBA position, which carries higher implied leverage. More broadly, we utilize leverage dynamically across the investment portfolio. This means that leverage capacity within our agency book can expand to support credit purchases, giving us the ability to deploy available capital and financing to where we see the most attractive returns. Robust non-QM origination and deal activity have brought the year-to-date non-agency residential issuance to $132 billion, putting it on pace to comfortably exceed last year's approximately $215 billion of securitization volume. At this rate, 2026 could mark a record year for issuance since the Great Financial Crisis. In addition to strong issuance volumes, securitization market pricing remained resilient even as rates moved higher. Non-QM AAA spreads tightened from 145 basis points to 130 basis points in the quarter, alongside a flatter credit curve with improved mezzanine tranche execution, improving overall deal economics. Our BPL rental portfolio has grown to $2.3 billion. As we mentioned before, Adamas is on track to complete five to six BPL rental securitizations this year. Most importantly, we are prioritizing quality over volume. Over time, we have built a differentiated securitization program that issues bonds investors covet for their strong underlying collateral quality, historical credit performance and meaningful prepayment protection. That differentiation is now increasingly reflected in Adamas' securitization execution as we priced our most recent deal tighter than the broader market despite a competitive issuance calendar. Turning now to Constructive. I wanted to take a moment to highlight how they are uniquely positioned in today's market. By volume, Constructive is a top-five specialist business purpose loan originator in the market with a lending platform primarily focused on originating BPL rental loans. Most notably, 100% of its BPL rental production over the last 12 months includes prepayment protection, mostly with prepayment penalty terms that last for as long as five years. This is a highly desirable structural feature that is valued by us and the market. Having this protection in our residential credit portfolio helps provide a counterbalance to the negative convexity in our agency book. Constructive also originates loans under disciplined credit standards, and that discipline has translated into excellent credit performance. For example, the Constructive segment in our BPL rental book has less than 1% of its loans in 60-plus day delinquency status. Constructive's strong distribution network to large-scale institutional partners also helps them find the best pricing for their loans in the market. All of this has translated to an impressive track record across market cycles with Constructive being profitable in 28 of the last 30 months. In the quarter, Constructive originated $428 million of business purpose loans, roughly in line with the prior quarter. Adamas was the primary purchaser of Constructive's loan production in the quarter, acquiring 71% of the originations. While the longer-term goal is to increase origination volume, our near-term emphasis is on operational efficiencies and cost improvements ahead of accelerating growth. During the quarter, we onboarded a new institutional loan financing counterparty that will deliver approximately 60 basis points of savings compared to our existing financing lines. This also comes with materially fewer aging restrictions and greater capital flexibility for Constructive. In aggregate, Constructive has identified approximately $3 million of annual cost savings across its loan origination process, and we expect that the implementation of these improvements will occur over the coming quarters. As a result, these annual savings should start to flow through to Constructive's financials in the latter half of 2026 and into 2027. Across BPL bridge and multifamily mezzanine portfolios, we are making steady progress in the wind down of those assets. In BPL bridge, we have kept delinquency stable as the portfolio declines. In multifamily, we are supported by the assets' stable credit performance and high repayment activity. Importantly, with a 12% coupon, the multifamily book continues to contribute positively to recurring income during the wind down. As loans pay off, we redeploy the capital to our higher-yielding core strategies where we see the potential to generate even stronger returns. In the remaining multifamily portfolio, 93% of the loans contain flat-to-market provisions. These provisions provide a meaningful incentive for borrowers to pursue timely resolutions rather than prolonging their hold periods in hope of realizing some speculative equity upside. This structural protection has been a key factor in supporting the heightened payoff rates to date. Despite a challenging market backdrop, our portfolio growth and diversification strategy have delivered strong book value and earnings performance year-to-date. I will now pass it over to Kristine to discuss our financials.
Thank you, Nick, and good morning, everyone. Jason and Nick have already discussed the strategic progress we made during the quarter, so I'll focus on key drivers behind second quarter financial results. For the second quarter, we reported GAAP net income attributable to common stockholders of $43.4 million, or $0.48 per share, and earnings available for distribution of $0.30 per share. Our Board increased the quarterly dividend to $0.27 per share, which remains well covered by EAD. After accounting for the dividend, we generated a 4.5% economic return on GAAP book value and 4.8% on adjusted book value. GAAP book value increased to $10.16 per share, while adjusted book value increased to $11.05 per share, extending our track record of consistent book value growth despite continued market volatility. Net interest income increased to $50.2 million during the quarter, while adjusted net interest income increased to $50.3 million, reflecting continued portfolio expansion across agency investments and BPL rental loans. Net interest spread increased to 148 basis points, primarily due to lower financing costs, more than offsetting the impact of lower asset yields associated with our continued shift toward agency investments and BPL rental loans. We continue to believe this portfolio mix provides a more stable and durable earnings profile over the long term. Derivative activity contributed positively to quarterly results, generating $48.8 million of gains during the quarter. Realized gains of $33.7 million reflected the settlement of derivative positions during the quarter, including a portion related to the transition from Treasury futures back to interest rate swaps. We also recognized $15.1 million of net unrealized gains as higher interest rates increased the value of our interest rate swaps. These gains more than offset the $8.5 million of net unrealized losses recorded on portions of our investment portfolio as higher interest rates reduced the value of Agency RMBS and certain residential loans. While higher interest rates created temporary pressure on asset valuations at the end of the quarter, our diversified portfolio and hedging strategy performed as intended, allowing us to continue growing recurring earnings, increasing book value and delivering another quarter of strong financial performance. Constructive continued to perform well during the quarter. Mortgage banking income increased to $16.2 million, benefiting from stronger gains on loan sales and higher origination fee income. After direct loan origination costs of $4.8 million and direct G&A expense of $9.8 million, Constructive generated approximately $2 million profit for the quarter on a stand-alone basis. We are pleased with Constructive's year-to-date performance despite a volatile market environment. Annualized ROE was approximately 12% during the first half of the year, and as Nick discussed, the initiatives currently underway are expected to improve funding costs and reduce operating expenses. As those efficiencies are implemented, we believe Constructive is well positioned to achieve our original underwriting target of 15% annual ROE. Total consolidated G&A was $25.6 million, which is within our estimated G&A ratio of approximately 7% to 7.5% for 2026. From a financing perspective, we continue to strengthen both our funding profile and liquidity position. During the quarter, we completed two BPL rental securitizations, totaling approximately $521 million at a weighted average effective cost of 5.48%, redeemed an existing residential loan securitization and increased warehouse capacity by $250 million to $3.7 billion. These actions further diversify our funding sources while supporting continued portfolio growth. We ended the quarter with approximately $182 million of available cash and approximately $400 million of total liquidity capacity, including financing available on unencumbered assets and underlevered assets. Company recourse leverage was 5.5x, while portfolio recourse leverage was 5.2x, which continues to be primarily concentrated on agency financing. We believe our liquidity position and funding flexibility leave us well positioned to continue growing the investment portfolio while maintaining a disciplined approach to leverage. On the capital markets front, during the quarter, we renewed our ATM equity program, increasing the maximum offered amount from $100 million to $250 million. The larger size reflects the continued growth and scale of Adamas and is intended to preserve long-term financial flexibility rather than signal any change in our capital allocation philosophy. Importantly, although our previous ATM program remained available, we did not issue any shares under that program. We continue to view common equity as an important source of long-term capital and remain committed to issuing shares only when doing so is accretive to existing stockholders and supports attractive long-term returns. Overall, the second quarter's growth in recurring earnings, book value and investment portfolio demonstrated continued execution of our strategy. We believe those results position Adamas well as we enter the second half of 2026. That concludes our prepared remarks. Operator, please open the line for questions.
分析師問答
Our first question comes from Bose George of KBW.
This is Frank Labetti on for Bose. Just want to start with Constructive — it had another strong quarter. Can you just talk about the current trends you're seeing quarter-to-date given the move in rates and how you're seeing competition evolve in that channel?
We see the pipelines in Constructive as being strong so far. Furthermore, the coupons that are in the pipeline were higher than the coupons that we had at quarter end. So we do see a strong level of very desirable loans that we would like to take on board. In terms of overall volume, we see no real guidance in terms of whether it is going to be higher or lower; it's still relatively early in the quarter in terms of what we're seeing. But we do see a pretty consistent level of pipeline. I mentioned in my remarks about the cost savings that we could potentially have, so that is something the team is currently implementing across its loan origination process, and we expect that to have a positive benefit to earnings on a go-forward basis. On the demand side, institutional demand has been surprisingly strong during these periods of volatility. What we have seen is that the securitization markets have been pretty consistent in terms of execution and price discovery. That has also allowed whole loan buyers to have a benchmark for where loans should trade. Over time, that has given them more confidence to be aggressive in bidding loans despite market volatility. So all in all, I would say the markets are very conducive to doing business. Rates are higher, which means coupons are higher, and from an execution perspective that bodes for higher yields on the strategies going forward.
Great. And then you mentioned in the prepared remarks the opportunistic use of the ATM as you trade closer to book or above book. Can you just talk about where you see deployment of that incremental capital and what your targeted returns are there?
Yes. Across our platform, looking at the residential landscape, we have the flexibility to move between different pockets — agencies and credit. For return on capital, we're looking for 15% plus type of equity returns on that capital. Each quarter there are different variables we're assessing and different opportunities that we're seeing, so it doesn't have to be consistent quarter-to-quarter on where we're deploying that capital. It's really what the market is providing us, and we're going to look to deploy it prudently in those areas. The areas we're seeing opportunities today include the credit side that Nick discussed; we're seeing expanded ROEs there. Agencies are range-bound: spreads were tight earlier in the quarter and have moved out slightly to date, which is making agencies more attractive. But on balance, credit seems to be a higher-returning opportunity with better risk-adjusted returns at the moment.
Great. And if I could, can we get an updated book value quarter-to-date?
Sure. We estimate that quarter-to-date adjusted book value was down approximately 2.3% as of the close of business on July 28.
Our next question comes from the line of Matthew Erdner of Jones.
Congrats on another great quarter. I'd like to touch on the multifamily book. It seems like the pace there slowed a little bit, but you guys mentioned the incentives for these borrowers not to keep extending. I'm trying to get your thoughts on the timing for the resolutions here and then where that capital is going to be deployed, whether it's opportunistically when you get the capital back or if there's a specific lever you want to pull?
Yes. Thank you for the question. On the multifamily side, there were $192 million of assets at quarter end, and we're seeing consistent payoff rates there. More importantly, we're seeing consistent conversations about future payoff rates that build a pipeline to continue the historical CPRs we are seeing. Last quarter we had one payoff, which was a conversation we've had over months before. The pipeline builds with these conversations. There are no extensions that are part of the issue or dynamic here. These are payoffs with maturities of loans that go beyond the current period. So we are really focusing on duration management more so than dealing with restructurings or extensions. We have one loan in the portfolio of 19 that's been restructured in the past and zero that are delinquent. The focus is timing when we believe the refinance opportunity is appropriate. As Nick mentioned, 93% of our portfolio has provisions that give us the control to bring the asset to market if we feel we do not want to continue being part of the loan arrangement. That's a powerful feature. It causes duration to shorten, and we would expect to continue using that across our portfolio to support the prepayment trends we're seeing. On portfolio rotation, these assets are unlevered on our balance sheet, so capital that comes back is redeployed into the myriad of opportunities we see, including assets we rotate into the space. We expect ROEs to expand on capital redeployed from the multifamily book to other asset classes in the market, so we expect an earnings pickup from that rotation.
One quick follow-on thought: we don't earmark particular proceeds to a particular strategy. Deployment is dependent on timing and what the market provides at that point in time. Sometimes repayments come in a little higher or a little lower. As we have done over the past few quarters, we've deployed proceeds into the best opportunity set we see at any given point in time.
Got it. That's helpful. And then switching gears to the BPL securitizations, it looks like the effective cost is starting to go up. What's pressuring that? Is it the higher move in rates we've seen over the past couple of weeks?
Yes. The higher rates are the primary driver. We have seen AAA spreads as tight as 105 earlier this year, but that has widened out a little. It is tighter than some of the widest points we've seen — where we've seen 140 to 145 — and now AAA spreads are around 130. I would say our securitization actually priced tighter than the market on the AAA side; we priced at 125 when deals around us were pricing at 130 on AAA. The majority of the move has been on the rate side. One thing that gives us comfort is that we are on pace for a record year of non-agency residential securitizations despite significant volatility and uncertainty in the rate policy path this year.
Our next question comes from the line of Doug Harter of BTIG.
On the relative attractiveness of residential credit today, is that more with incremental capital that you would be moving there, or would you think about rotating out of some of the agency position as those opportunities presented themselves?
I would say it's more on the incremental capital side. I mentioned earlier that we expect to reinvest payoffs on the agency side back into agencies. We expect the 56% capital allocation to remain relatively stable. So capital coming from resolution of noncore strategies will likely be rotated more into residential credit.
I appreciate that. And then as you think about continuing to grow the portfolio outside of capital rotation from the noncore, how do you think about leverage on the core part of the portfolio? Is there room to move that higher, or does leverage increase as you resolve the unlevered multifamily?
At quarter end, company leverage was 5.5x, which we see as a comfortable area to operate. We see opportunity to slightly increase that over the year, particularly as noncore unlevered assets roll off into leveraged strategies such as residential credit or agencies. That is the primary reason for the slight increase in leverage in our book from last quarter. It's a function of asset rotation rather than seeking higher leverage for leverage's sake.
At this time, I'd like to ask if there are any additional questions. Okay. Thank you. I'm showing no further questions in the queue. So I would like to turn it back to Jason Serrano for closing remarks.
Yes. Thank you, everybody, for joining us this morning. We look forward to sharing our Q3 update in October. Have a great day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.