ADAMAS TRUST, INC. (ADAMH) Business Analysis — Annual Report Summary, Outlook & Risks

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ADAMAS TRUST, INC. (ADAMH)

Business Summary

Adamas Trust, Inc. (Adamas) is an internally-managed REIT that strategically deploys 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. The company's current investment portfolio includes credit-sensitive single-family and multi-family assets, as well as other fixed-income investments such as Agency RMBS. Through its wholly-owned subsidiary, Constructive Loans, LLC (Constructive), Adamas also originates business purpose loans for residential real estate investors ¹. Adamas operates in two segments: investment portfolio and Constructive, with the investment portfolio generating the substantial portion of revenues and income ².

Adamas's core business model revolves around owning and managing a diversified portfolio of primarily mortgage-related single-family residential assets that include elements of credit risk and/or interest rate risk. This strategy involves a leveraged portfolio of Agency investments, mainly Agency fixed-rate RMBS and Agency ARMs, which provide coupon income. The company also focuses on credit assets, many of which are originated or sourced through proprietary channels, including Constructive, targeting assets that are expected to provide an attractive total rate of return. Adamas also owns and manages investments in multi-family and single-family rentals, with a strategic shift towards single-family residential assets and a reduction in multi-family assets ³.

The investment portfolio segment is substantially comprised of single-family and multi-family residential investments. Single-family investments include Agency RMBS, residential loans, non-Agency RMBS, and single-family rental properties. The Agency RMBS portfolio, a core component, consists primarily of Agency fixed-rate RMBS and Agency ARMs, guaranteed by Fannie Mae or Freddie Mac, and Agency IOs. Residential loans include short-term business purpose bridge loans (12 to 24 months), business purpose rental loans, performing residential mortgage loans (GSE-eligible, non-QM, investor loans), seasoned performing, re-performing, non-performing, and other delinquent mortgage loans, and second mortgages. Non-Agency RMBS are collateralized by residential credit assets and may consist of senior, mezzanine, or subordinated tranches. As of December 31, 2025, Adamas owned 471 single-family rental properties, predominantly in Illinois and Maryland, participating in the U.S. Department of Housing and Urban Development Housing Choice Vouchers program ⁴.

Multi-family investments, as of December 31, 2025, consist of credit-oriented investments such as preferred equity investments and a cross-collateralized preferred equity and joint venture equity investment (Mezzanine Lending) in multi-family properties. These investments generally focus on middle-market multi-family apartment communities in secondary and tertiary markets. Adamas does not typically operate or manage these properties day-to-day, acting as a capital provider alongside experienced property-level operators. As of December 31, 2025, 100% of the company's Mezzanine Lending assets were structured as preferred equity investments. Adamas also holds an approximate 27% common equity interest and approximately $144.1 million ⁵ of preferred equity interests in an entity that owns nine multi-family properties in six states, as part of a cross-collateralized mezzanine lending investment ⁶. The company completed the disposition of the majority of its joint venture equity investments in multi-family properties during the year ended December 31, 2025, and does not anticipate making additional majority or significant minority common equity investments in multi-family properties in the future ⁷.

For the fiscal year ended December 31, 2025, Adamas reported net income attributable to common stockholders of $101.1 million ⁸, or $1.12 ⁹ per basic common share and $1.10 ¹⁰ per diluted common share. Total interest income was $601.948 million ¹¹, with interest expense of $452.647 million ¹², resulting in net interest income of $149.301 million ¹³. The company experienced a net loss from real estate of $12.417 million ¹⁴ and other income of $123.859 million ¹⁵. General and administrative expenses were $72.656 million ¹⁶, portfolio operating expenses were $28.011 million ¹⁷, loan origination costs were $8.101 million ¹⁸, and financing transaction costs were $14.173 million ¹⁹. As of December 31, 2025, total assets were $12.638 billion ²⁰, with cash, cash equivalents, and restricted cash of $326.410 million ²¹. Total liabilities were $11.208 billion ²², including repurchase agreements and warehouse facilities of $6.753 billion ²³, collateralized debt obligations of $3.511 billion ²⁴, and senior unsecured notes of $360.437 million ²⁵. Company's stockholders' equity was $1.426 billion ²⁶.

Comparing 2025 to 2024, net income attributable to common stockholders significantly improved from a loss of $103.785 million ²⁷ in 2024 to a gain of $101.106 million ²⁸ in 2025. Interest income increased by $200.668 million ²⁹, while interest expense increased by $135.222 million ³⁰. Net interest income grew by $65.446 million ³¹. Net loss from real estate decreased by $30.424 million ³², indicating improved performance in this area. Other income saw a substantial increase of $166.095 million ³³, moving from a loss of $42.236 million ³⁴ in 2024 to a gain of $123.859 million ³⁵ in 2025. General and administrative expenses increased by $23.984 million ³⁶, primarily due to the consolidation of Constructive. Portfolio operating expenses decreased by $2.677 million ³⁷, while loan origination costs increased by $8.101 million ³⁸ due to Constructive's consolidation. Financing transaction costs increased by $1.838 million ³⁹.

During the year ended December 31, 2025, Adamas achieved record annual investment activity, expanding its investment portfolio by approximately $3.1 billion ⁴⁰, or 42% ⁴¹, to $10.5 billion ⁴². Total acquisitions amounted to $6.1 billion ⁴³, primarily in Agency RMBS ($4.1 billion) ⁴⁴ and business purpose loans ($1.7 billion) ⁴⁵. On July 15, 2025, Adamas completed the acquisition of the remaining 50% ⁴⁶ interest in Constructive, leading to full ownership and consolidation of its financial results from the third quarter of 2025. Constructive originated approximately $1.8 billion ⁴⁷ of loans in 2025, with $864.9 million ⁴⁸ originated since July 15, 2025. The company also completed four securitizations of residential loans, generating approximately $945.5 million ⁴⁹ in net proceeds, and issued $82.5 million ⁵⁰ of 9.125% ⁵¹ 2030 Senior Notes and $115.0 million ⁵² of 9.875% ⁵³ 2030 Senior Notes. The wind-down of multi-family joint venture equity investments was completed during the year ⁵⁴.

Business Outlook & Financial Sufficiency

Adamas anticipates maintaining a disciplined and measured approach to portfolio growth, supported by the integration of Constructive's origination platform and a continued focus on high-quality, income-producing assets. The company believes its current balance sheet, diversified capital sources, and expanded origination capacity position it to capitalize on market opportunities, further scale recurring earnings, and enhance long-term stockholder value ⁵⁵.

The company's investment strategy for the upcoming period will continue to target Agency RMBS, residential loans (including business purpose loans), non-Agency RMBS, and other mortgage-, residential housing-, and credit-related assets. Strategic investments in companies from which targeted assets are purchased are also part of the plan. Opportunistic acquisitions and management of various other types of mortgage-, residential housing-, and credit-related or alternative investments, such as CMBS, collateralized mortgage obligations, MSRs, excess mortgage servicing spreads, preferred equity and joint venture equity investments in multi-family properties, securities issued by newly originated securitizations, ABS, and debt or equity investments in alternative assets or businesses, may also be pursued, subject to REIT qualification and Investment Company Act exclusion ⁵⁶.

In January 2026, Adamas completed the issuance of $90.0 million ⁵⁷ of its 9.250% ⁵⁸ Senior Notes due 2031 in an underwritten public offering, receiving $86.6 million ⁵⁹ in net proceeds. Additionally, in January 2026, a new securitization of residential loans was completed, resulting in approximately $309.1 million ⁶⁰ of net proceeds, which were used to repay approximately $287.3 million ⁶¹ on outstanding repurchase agreements related to residential loans ⁶².

The Federal Reserve's December 2025 statement indicated that job gains slowed in 2025, the unemployment rate edged up, inflation remained somewhat elevated, and downside risks to employment rose in recent months. Federal Reserve officials' views on additional cuts to the target range for the federal funds rate by the end of 2026 are divided, though a majority indicated that one or more additional cuts would be appropriate ⁶³. The FHFA raised the cap on Agency RMBS that Fannie Mae and Freddie Mac can hold from $40 billion ⁶⁴ each to $225 billion ⁶⁵ each in January 2026, and the current administration instructed them to purchase $200 billion ⁶⁶ in Agency RMBS. These actions may drive Agency RMBS values higher and tighten mortgage spreads, increasing adjusted book value but reducing return potential on new investments ⁶⁷.

Adamas's Board of Directors approved extensions of its common stock repurchase program, with $188.2 million ⁶⁸ remaining available for repurchase, and its preferred stock repurchase program, with $97.6 million ⁶⁹ remaining available for repurchase. The expiration dates for both programs were extended from March 31, 2026, to March 31, 2027 ⁷⁰. In February 2026, the company redeemed its 2026 Senior Notes at 100% ⁷¹ of the $100.0 million ⁷² principal amount plus accrued but unpaid interest, for a total payment of $101.5 million ⁷³, recognizing a loss on extinguishment of debt of approximately $0.3 million ⁷⁴.

Management Sentiments & Priorities

Management's message to shareholders emphasizes a strategic repositioning of the investment portfolio since 2023, aiming to enhance recurring income through disciplined portfolio management and an operating platform designed to capture opportunities across real estate and capital markets. The year ended December 31, 2025, was highlighted as a strategically significant period, marked by corporate rebranding, the acquisition of Constructive, earnings growth, record investment activity, and further execution of the capital rotation strategy to enhance recurring income, improve portfolio liquidity, and strengthen the operating platform. Net income attributable to common stockholders for 2025 was $101.1 million ¹³³, or $1.12 ¹³⁴ per share, with Earnings Available for Distribution (EAD) per common share increasing 141% ¹³⁵ year-over-year to $0.89 ¹³⁶ per share. GAAP book value per share increased 3.4% ¹³⁷ to $9.60 ¹³⁸, and adjusted book value per share rose 2.7% ¹³⁹ to $10.63 ¹⁴⁰, resulting in an economic return of 12.72% ¹⁴¹ and 11.01% ¹⁴² on GAAP and adjusted book value per share, respectively, for 2025. Supported by this earnings momentum, the Board of Directors declared quarterly dividends of $0.23 ¹⁴³ per share in the third and fourth quarters of 2025, a 15% ¹⁴⁴ increase from the first and second quarters, equating to a 12.6% ¹⁴⁵ dividend yield as of December 31, 2025. Management expects to maintain a disciplined and measured approach to portfolio growth, supported by the integration of Constructive's origination platform and a continued focus on high-quality, income-producing assets, believing this strategy will capitalize on market opportunities, scale recurring earnings, and enhance long-term stockholder value ¹⁴⁶.

Risk Factors

Adamas faces material risks including declines in the market values of its investments, which may adversely affect periodic reported results and credit availability, potentially reducing earnings, book value, and liquidity ⁷⁵. The company is exposed to interest rate mismatches between its interest-earning assets and borrowings, which could reduce net income or result in losses during periods of changing interest rates ⁷⁶. Inaccurate estimates of loss-adjusted yields on credit-sensitive assets may lead to losses ⁷⁷. Interest rate increases could decrease the availability of targeted assets and increase interest expense ⁷⁸. The investment portfolio may be concentrated in certain asset types or geographic areas, increasing exposure to economic downturns ⁷⁹. Prepayment rates can change unpredictably, adversely affecting asset performance ⁸⁰. The portfolio of business purpose loans carries unique risks compared to traditional residential mortgage loans ⁸¹. Investments in subordinated tranches of RMBS, CMBS, and ABS have a greater risk of loss ⁸². The election of fair value option for most investments may cause increased volatility in GAAP results ⁸³. Reliance on third-party service providers for various services poses risks if they fail to perform ⁸⁴. Limited due diligence in acquisitions or underwriting may not reveal all risks, leading to material losses ⁸⁵. The illiquidity of certain assets may hinder timely sales ⁸⁶. The use of models for asset valuation introduces risks if models are incorrect or based on incomplete information ⁸⁷. Valuations of residential loans are inherently uncertain and depend on borrower ability to service or refinance debt, and for business purpose loans, on rental income ⁸⁸. Preferred equity investments involve greater risks of loss than senior loans ⁸⁹. Real estate and related assets are subject to risks particular to real property, including natural disasters and economic conditions ⁹⁰. Competition may prevent asset acquisition on favorable terms ⁹¹. Cybersecurity breaches and system failures could significantly disrupt business operations and harm reputation ⁹². The company's recourse leverage ratio was approximately 5.0 to 1 ⁹³ as of December 31, 2025, and its portfolio recourse leverage ratio was approximately 4.7 to 1 ⁹⁴, indicating significant leverage that can exacerbate losses ⁹⁵. Access to financing sources may be limited or unfavorable, impacting operations and asset acquisitions ⁹⁶. Repurchase agreements may require additional collateral, reducing liquidity ⁹⁷. Non-recourse securitizations and recourse structured financings expose the company to risks that could result in losses ⁹⁸. Counterparty defaults on repurchase transactions or the company's own defaults on financial covenants could lead to significant losses and cross-defaults ⁹⁹. Hedging strategies may not be fully effective and can be expensive, potentially adversely affecting financial results ¹⁰⁰. Geopolitical and general market risks, including commodity futures, can cause volatility in net income ¹⁰¹. Difficult conditions in mortgage, real estate, and financial markets, and the economy generally, may cause future losses ¹⁰². Changes in government policies, laws, or regulations, or the U.S. political environment, could negatively impact the business ¹⁰³. Downgrades or perceived potential downgrades of U.S. credit ratings and unresolved U.S. fiscal and debt policies may materially adversely affect the business ¹⁰⁴. The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting their relationship with the U.S. Government, may materially adversely affect the business ¹⁰⁵. The company may change its investment, financing, or hedging strategies and asset allocation and operational and management policies without stockholder consent, potentially leading to riskier assets or greater leverage ¹⁰⁶. Maintaining the Investment Company Act exemption imposes significant operational limits ¹⁰⁷. The accrual of dividends on certain preferred stock series at a floating rate could adversely affect cash distributions and earnings ¹⁰⁸. Mortgage loan modification programs and future legislative action may adversely affect asset value and returns ¹⁰⁹. Potential violations of predatory lending laws could lead to significant liability ¹¹⁰. The business is subject to extensive regulation ¹¹¹. Certain provisions of Maryland law and the company's charter and bylaws could hinder a change in control ¹¹². The stock ownership limit imposed by the charter may inhibit market activity and restrict business combination opportunities ¹¹³. Failure to qualify as a REIT would adversely affect operations and distributions ¹¹⁴. REIT distribution requirements could adversely affect liquidity ¹¹⁵. Dividends payable by REITs do not qualify for reduced tax rates, potentially making them less attractive to investors ¹¹⁶. Complying with REIT requirements may force the company to forego or liquidate otherwise attractive investments ¹¹⁷. The failure of certain investments subject to a repurchase agreement to qualify as real estate assets would adversely affect REIT qualification ¹¹⁸. Selling assets directly could incur a significant prohibited transactions tax liability ¹¹⁹. Interests in joint ventures or preferred equity could jeopardize REIT qualification ¹²⁰. The "taxable mortgage pool" rules may increase taxes and limit future securitizations ¹²¹. Failure of a subsidiary REIT to qualify as a REIT could lead to higher taxes and impact the company's REIT status ¹²². The failure of excess MSRs to qualify as real estate assets or income from them to qualify as interest from mortgages could adversely affect REIT qualification ¹²³. Uncertainty exists regarding the treatment of TBAs for REIT asset and income tests ¹²⁴. Unforeseen or catastrophic events, including pandemics, terrorist attacks, or natural disasters, could lead to losses ¹²⁵. Climate change and severe weather pose risks to property values and operations ¹²⁶. The company is dependent on certain key personnel, and their loss could materially adversely affect operations ¹²⁷. Investing in the company's securities involves a high degree of risk ¹²⁸. The market price and trading volume of securities may be volatile ¹²⁹. There is no minimum dividend payment level for common stockholders, and no assurances of future dividend payments ¹³⁰. Future offerings of debt or equity securities may dilute existing stockholders or adversely affect market price ¹³¹. An increase in interest rates may adversely affect the market price of securities and ability to make distributions ¹³².

View Source Annual Report on SEC.gov ↗

References

[1] Item 1, Business — General
[2] Item 1, Business — General
[3] Item 1, Business — Our Investment Strategy
[4] Item 1, Business — Investment Portfolio
[5] Item 1, Business — Cross-Collateralized Mezzanine Lending
[6] Item 1, Business — Cross-Collateralized Mezzanine Lending
[7] Item 1, Business — Joint Venture Equity
[8] Item 7, MD&A — Selected Statement of Operations Data
[9] Item 7, MD&A — Selected Statement of Operations Data
[10] Item 7, MD&A — Selected Statement of Operations Data
[11] Item 7, MD&A — Selected Statement of Operations Data
[12] Item 7, MD&A — Selected Statement of Operations Data
[13] Item 7, MD&A — Selected Statement of Operations Data
[14] Item 7, MD&A — Selected Statement of Operations Data
[15] Item 7, MD&A — Selected Statement of Operations Data
[16] Item 7, MD&A — Selected Statement of Operations Data
[17] Item 7, MD&A — Selected Statement of Operations Data
[18] Item 7, MD&A — Selected Statement of Operations Data
[19] Item 7, MD&A — Selected Statement of Operations Data
[20] Item 7, MD&A — Selected Balance Sheet Data
[21] Item 7, MD&A — Capital Allocation
[22] Item 7, MD&A — Selected Balance Sheet Data
[23] Item 7, MD&A — Selected Balance Sheet Data
[24] Item 7, MD&A — Selected Balance Sheet Data
[25] Item 7, MD&A — Selected Balance Sheet Data
[26] Item 7, MD&A — Selected Balance Sheet Data
[27] Item 7, MD&A — Selected Statement of Operations Data
[28] Item 7, MD&A — Selected Statement of Operations Data
[29] Item 7, MD&A — Results of Operations
[30] Item 7, MD&A — Results of Operations
[31] Item 7, MD&A — Results of Operations
[32] Item 7, MD&A — Results of Operations
[33] Item 7, MD&A — Results of Operations
[34] Item 7, MD&A — Results of Operations
[35] Item 7, MD&A — Results of Operations
[36] Item 7, MD&A — Results of Operations
[37] Item 7, MD&A — Results of Operations
[38] Item 7, MD&A — Results of Operations
[39] Item 7, MD&A — Results of Operations
[40] Item 7, MD&A — Executive Summary
[41] Item 7, MD&A — Executive Summary
[42] Item 7, MD&A — Executive Summary
[43] Item 7, MD&A — Executive Summary
[44] Item 7, MD&A — Executive Summary
[45] Item 7, MD&A — Executive Summary
[46] Item 7, MD&A — Executive Summary
[47] Item 7, MD&A — Executive Summary
[48] Item 7, MD&A — Executive Summary
[49] Item 7, MD&A — Executive Summary
[50] Item 7, MD&A — Executive Summary
[51] Item 7, MD&A — Executive Summary
[52] Item 7, MD&A — Executive Summary
[53] Item 7, MD&A — Executive Summary
[54] Item 7, MD&A — Executive Summary
[55] Item 7, MD&A — Executive Summary
[56] Item 7, MD&A — Executive Summary
[57] Item 7, MD&A — Subsequent Developments
[58] Item 7, MD&A — Subsequent Developments
[59] Item 7, MD&A — Subsequent Developments
[60] Item 7, MD&A — Subsequent Developments
[61] Item 7, MD&A — Subsequent Developments
[62] Item 7, MD&A — Subsequent Developments
[63] Item 7, MD&A — Current Market Conditions and Commentary
[64] Item 7, MD&A — Current Market Conditions and Commentary
[65] Item 7, MD&A — Current Market Conditions and Commentary
[66] Item 7, MD&A — Current Market Conditions and Commentary
[67] Item 7, MD&A — Current Market Conditions and Commentary
[68] Item 7, MD&A — Subsequent Developments
[69] Item 7, MD&A — Subsequent Developments
[70] Item 7, MD&A — Subsequent Developments
[71] Item 7, MD&A — Subsequent Developments
[72] Item 7, MD&A — Subsequent Developments
[73] Item 7, MD&A — Subsequent Developments
[74] Item 7, MD&A — Subsequent Developments
[75] Item 1A, Risk Factors — Declines in the market values of our investments may adversely affect periodic reported results and credit availability.
[76] Item 1A, Risk Factors — Interest rate mismatches between the interest-earning assets held in our investment portfolio and the borrowings used to fund the purchases of those assets may reduce our net income or result in a loss during periods of changing interest rates.
[77] Item 1A, Risk Factors — If our estimates of the loss-adjusted yields of our investments in credit sensitive assets prove inaccurate, we may experience losses.
[78] Item 1A, Risk Factors — An increase in interest rates may cause a decrease in the availability of certain of our targeted assets, including Agency RMBS, and could cause our interest expense to increase, which could materially adversely affect our ability to acquire targeted assets that satisfy our investment objectives, our earnings and our ability to make distributions to our stockholders.
[79] Item 1A, Risk Factors — Our investment portfolio may at times be concentrated in certain asset types or secured by properties concentrated in a limited number of real estate sectors or geographic areas, which increases, with respect to those asset types, property types or geographic locations, our exposure to economic downturns and risks associated with the real estate and lending industries in general.
[80] Item 1A, Risk Factors — Prepayment rates can change, adversely affecting the performance of our assets.
[81] Item 1A, Risk Factors — Our portfolio of business purpose loans exposes us to risks that are different from the risks involved with our traditional investments in residential mortgage loans.
[82] Item 1A, Risk Factors — Our investments may include subordinated tranches of RMBS, CMBS and ABS, which are subordinate in right of payment to more senior securities and have greater risk of loss than other investments.
[83] Item 1A, Risk Factors — We have experienced and may experience in the future increased volatility in our GAAP results of operations as we have elected fair value option for the majority of our investments.
[84] Item 1A, Risk Factors — In connection with our operating and investment activity, we rely on third-party service providers to perform a variety of services, comply with applicable laws and regulations, and carry out contractual covenants and terms, the failure of which by any of these third-party service providers may adversely impact our business and financial results.
[85] Item 1A, Risk Factors — To the extent that due diligence is conducted as part of our acquisition or underwriting process, such due diligence may be limited, may not reveal all of the risks associated with such assets and may not reveal other weaknesses in such assets, which could lead to material losses.
[86] Item 1A, Risk Factors — The lack of liquidity in certain of our assets may adversely affect our business.
[87] Item 1A, Risk Factors — The use of models in connection with the valuation of our assets subjects us to potential risks in the event that such models are incorrect, misleading or based on incomplete information.
[88] Item 1A, Risk Factors — Our investments in residential loans are difficult to value and such valuations are dependent upon the borrower’s ability to service or refinance their debt and, in the case of business purpose loans made to borrowers who rent the respective collateral property, are also dependent upon such collateral property’s rental income.
[89] Item 1A, Risk Factors — Our preferred equity investments involve greater risks of loss than more senior loans secured by income-producing properties.
[90] Item 1A, Risk Factors — Our business is subject to risks particular to real property and real estate-related assets.
[91] Item 1A, Risk Factors — Competition may prevent us from acquiring assets on favorable terms or at all, which could have a material adverse effect on our business, financial condition and results of operations.
[92] Item 1A, Risk Factors — Maintaining cybersecurity and data security is important to our business and a breach of our cybersecurity or data security could result in serious harm to our reputation and have a material adverse impact on our business and financial results.
[93] Item 7, MD&A — Capital Allocation
[94] Item 7, MD&A — Capital Allocation
[95] Item 1A, Risk Factors — We leverage our equity, which can exacerbate any losses we incur on our current and future investments and may reduce cash available for distribution to our stockholders.
[96] Item 1A, Risk Factors — Our access to financing sources, which may not be available on favorable terms, or at all, may be limited, and this may materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.
[97] Item 1A, Risk Factors — The repurchase agreements that we use to finance our investments may require us to provide additional collateral, which could reduce our liquidity and harm our financial condition.
[98] Item 1A, Risk Factors — We directly or indirectly utilize non-recourse securitizations and recourse structured financings and such structures expose us to risks that could result in losses to us.
[99] Item 1A, Risk Factors — If a counterparty to our repurchase transactions defaults on its obligation to resell the pledged assets back to us at the end of the transaction term or if we default on our obligations under the repurchase agreement, we may incur losses.
[100] Item 1A, Risk Factors — Hedging against interest rate, credit and market value changes as well as other risks may materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.
[101] Item 1A, Risk Factors — Volatility in the market value of certain derivatives we use to manage exposures to geopolitical and general market risks may cause volatility in our net income.
[102] Item 1A, Risk Factors — Difficult conditions in the mortgage, real estate and financial markets and the economy generally have caused and may cause us to experience losses in the future.
[103] Item 1A, Risk Factors — We cannot predict the effect that changes in government policies, laws or regulations or the U.S. political environment will have on our business and the markets in which we operate.
[104] Item 1A, Risk Factors — The downgrade, or perceived potential downgrade, of the credit ratings of the U.S. and the failure to resolve issues related to U.S. fiscal and debt policies may materially adversely affect our business, liquidity, financial condition and results of operations.
[105] Item 1A, Risk Factors — The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in such conservatorship or laws and regulations affecting the relationship between Fannie Mae, Freddie Mac and Ginnie Mae and the U.S. Government, may materially adversely affect our business, financial condition and results of operations, and our ability to pay dividends to our shareholders.
[106] Item 1A, Risk Factors — We may change our investment, financing, or hedging strategies and asset allocation and operational and management policies without stockholder consent, which may result in the purchase of riskier assets, the use of greater leverage or commercially unsound actions, any of which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.
[107] Item 1A, Risk Factors — Maintenance of our exemption from registration as an investment company under the Investment Company Act imposes significant limits on our operations.
[108] Item 1A, Risk Factors — The accrual of dividends on certain of our series of preferred stock at a floating rate in the future could adversely affect our ability to make cash distributions at our intended levels, or at all, or otherwise materially adversely affect our earnings, cash flows or financial condition.
[109] Item 1A, Risk Factors — Mortgage loan modification programs and future legislative action may adversely affect the value of, and the returns on, our targeted assets.
[110] Item 1A, Risk Factors — We could be subject to liability for potential violations of predatory lending laws, which could materially adversely affect our business, financial condition and results of operations, and our ability to make distributions to our stockholders.
[111] Item 1A, Risk Factors — Our business is subject to extensive regulation.
[112] Item 1A, Risk Factors — Certain provisions of Maryland law and our charter and bylaws could hinder, delay or prevent a change in control which could have an adverse effect on the value of our securities.
[113] Item 1A, Risk Factors — The stock ownership limit imposed by our charter may inhibit market activity in our common stock and may restrict our business combination opportunities.
[114] Item 1A, Risk Factors — Failure to qualify as a REIT would adversely affect our operations and ability to make distributions.
[115] Item 1A, Risk Factors — REIT distribution requirements could adversely affect our liquidity.
[116] Item 1A, Risk Factors — Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations.
[117] Item 1A, Risk Factors — Complying with REIT requirements may cause us to forego or liquidate otherwise attractive investments and rapid changes in the market value or income potential of our assets may make it more difficult for us to maintain our qualification as a REIT or our exclusion or exemption from regulation under the Investment Company Act.
[118] Item 1A, Risk Factors — The failure of certain investments subject to a repurchase agreement to qualify as real estate assets would adversely affect our ability to qualify as a REIT.
[119] Item 1A, Risk Factors — We may incur a significant tax liability as a result of selling assets that might be subject to the prohibited transactions tax if sold directly by us.
[120] Item 1A, Risk Factors — Our qualification as a REIT could be jeopardized as a result of our interests in joint ventures or preferred equity.
[121] Item 1A, Risk Factors — The “taxable mortgage pool” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations.
[122] Item 1A, Risk Factors — If our subsidiary REIT failed to qualify as a REIT, we could be subject to higher taxes and could fail to remain qualified as a REIT.
[123] Item 1A, Risk Factors — The failure of excess MSRs held by us to qualify as real estate assets, or the failure of the income from excess MSRs to qualify as interest from mortgages, could adversely affect our ability to qualify as a REIT.
[124] Item 1A, Risk Factors — Uncertainty exists with respect to the treatment of our TBAs for purposes of the REIT asset and income tests.
[125] Item 1A, Risk Factors — We may incur losses as a result of unforeseen or catastrophic events, including the emergence of a pandemic, terrorist attacks, acts of violence or war, extreme weather events or other natural disasters.
[126] Item 1A, Risk Factors — We face possible risks associated with the effects of climate change and severe weather.
[127] Item 1A, Risk Factors — We are dependent on certain key personnel.
[128] Item 1A, Risk Factors — Investing in our securities involves a high degree of risk.
[129] Item 1A, Risk Factors — The market price and trading volume of our securities may be volatile.
[130] Item 1A, Risk Factors — We have not established a minimum dividend payment level for our common stockholders and there are no assurances of our ability to pay dividends to common or preferred stockholders in the future.
[131] Item 1A, Risk Factors — Future offerings of debt securities, which would rank senior to our common stock and preferred stock upon our liquidation, and future offerings of equity securities, which would dilute our existing stockholders and may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock and, in certain circumstances, our preferred stock.
[132] Item 1A, Risk Factors — An increase in interest rates may have an adverse effect on the market price of our securities and our ability to make distributions to our stockholders.
[133] Item 7, MD&A — Executive Summary
[134] Item 7, MD&A — Executive Summary
[135] Item 7, MD&A — Executive Summary
[136] Item 7, MD&A — Executive Summary
[137] Item 7, MD&A — Executive Summary
[138] Item 7, MD&A — Executive Summary
[139] Item 7, MD&A — Executive Summary
[140] Item 7, MD&A — Executive Summary
[141] Item 7, MD&A — Executive Summary
[142] Item 7, MD&A — Executive Summary
[143] Item 7, MD&A — Executive Summary
[144] Item 7, MD&A — Executive Summary
[145] Item 7, MD&A — Executive Summary
[146] Item 7, MD&A — Executive Summary

Analysis on 5/19/2026