Company: ADAMM
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001273685-25-000072
Chunk: 204

Company: ADAMAS TRUST, INC.
Filing Date: 2025-08-01
Form: 10-Q
Item: Part I, Item 2
Chunk 204
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 rental properties, as well as the availability of certain of our targeted assets.

Rental Housing. According to data provided by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, starts on multi-family homes containing five or more units averaged a seasonally adjusted annual rate of 387,667 and 375,667 for the three and six months ended June 30, 2025, respectively, as compared to 336,583 for the twelve months ended December 31, 2024. According to RealPage Analytics, effective rents for professionally managed apartments grew 0.5% for the twelve months ended June 2025. While rent growth was modest, RealPage Analytics noted that occupancy has steadily increased over the last year, demonstrating that occupancy has remained a priority for operators over rent growth. Weakening multi-family housing fundamentals, including, among other things, increasing supply of apartments and declining rents in the markets or submarkets in which we invest, increasing interest rates, widening capitalization rates and reduced liquidity for owners of multi-family properties, may cause our operating partners to fail to meet their obligations to us and/or contribute to reduced cash flows from and/or valuation declines for multi-family properties, and in turn, many of the multi-family investments that we own.

90

Credit Spreads. Investment grade and high-yield credit spreads both tightened over the course of the second quarter of 2025 with investment grade spreads finishing 11 basis points lower than the start of the second quarter of 2025 and high-yield spreads finishing 59 basis points lower than the start of the first quarter of 2025. Tightening credit spreads generally increase the value of many of our credit sensitive assets, while widening credit spreads tend to have a negative impact on the value of many of our credit sensitive assets.

Financing Markets. From June 2022 until the end of August 2024, the Treasury curve inverted with short term yields greater than long term yields, which was the longest inverted Treasury curve on record. Inversions and subsequent normalizations of this spread are generally considered to be indicators of a recession in the near term, although some market commentators have cautioned against August 2024’s uninversion being such an indicator. On June 30, 2025, the spread between the 2-Year U.S. Treasury yield and the 10-Year U.S. Treasury yield closed at 52 basis points, as compared to a 33 basis point spread on December 31, 2024. This spread is important