Company: ADAMM
Filing Date: 2025-09-05
Form Type: S-3
Source: 0001104659-25-087812
Chunk: 81

Company: ADAMAS TRUST, INC.
Filing Date: 2025-09-05
Form: S-3
Chunk 81
---
 asset tests.

To the extent that we hold Agency RMBS, non-Agency RMBS or CMBS that do not represent REMIC interests, such assets may not qualify as real estate assets, depending upon the circumstances and the specific structure of the investment. We may hold such investments through our TRSs.

As discussed above under “— Gross Income Tests,” we own residential loans, including residential mortgage loans that we acquired at a discount to their outstanding principal balance, and have in the past and may in the future originate mezzanine loans. In general, under the applicable Treasury regulations, if a loan is secured by real property and other property and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan as of: (i) the date we agreed to acquire or originate the loan; or (ii) in the event of a significant modification, the date we modified the loan, then a portion of the interest income from such a loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. Although the law is not entirely clear, a portion of the loan will also likely be a nonqualifying asset for purposes of the 75% asset test. The nonqualifying portion of such a loan would be subject to, among other requirements, the 10% vote test or 10% value test. IRS Revenue Procedure 2014-51 provides a safe harbor

<div align='center'>51</div>

TABLE OF CONTENTS

under which the IRS has stated that it will not challenge a REIT’s treatment of a loan as being, in part, a qualifying real estate asset in an amount equal to the lesser of: (i) the fair market value of the loan on the date of the relevant quarterly REIT asset test; or (ii) the greater of (a) the current fair market value of the real property securing the loan on the date of the relevant quarterly REIT asset test or (b) the fair market value of the real property securing the loan determined as of the date the REIT committed to acquire the loan. We will invest in mortgage loans that we acquire at a discount to their outstanding principal balance in a manner consistent with maintaining our qualification as a REIT.

As described above, Revenue Procedure 2003-65 provides a safe harbor pursuant to which certain mezzanine loans secured by a first priority security interest in ownership interests in a partnership