Company: ADAMM
Filing Date: 2025-09-05
Form Type: S-3
Source: 0001104659-25-087812
Chunk: 82

Company: ADAMAS TRUST, INC.
Filing Date: 2025-09-05
Form: S-3
Chunk 82
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 or limited liability company will be treated as qualifying assets for purposes of the 75% asset test (and therefore, are not subject to the 5% asset test, the 10% vote test, and the 10% value test). See “— Requirements for Qualification — Gross Income Tests.” Although our mezzanine loans typically do not meet all of the requirements for reliance on that safe harbor, we believe our mezzanine loans should be treated as qualifying assets for the 75% asset test or should be excluded from the definition of securities for purposes of the 10% vote test and the 10% value test. We will continue to make mezzanine loans only to the extent such loans will not cause us to fail the asset tests described above.

As discussed above under “— Gross Income Tests,” we intend to invest in excess MSRs. The IRS has issued private letter rulings to other REITs holding that excess MSRs are qualifying assets for purposes of the 75% asset test. A private letter ruling may be relied upon only by the taxpayer to whom it is issued, and the IRS may revoke a private letter ruling. Based on the analysis in those private letter rulings and other IRS guidance regarding excess MSRs, we generally intend to treat our investments in excess MSRs as qualifying assets for purposes of the 75% asset test to the extent the underlying mortgage loans are qualifying for purposes of such test. However, we do not intend to seek our own private letter ruling. A successful challenge of our treatment of our excess MSRs could result in our being treated as failing the 75% asset test. If we failed such test but qualified for a “savings” provision described below, we would be required to pay a penalty tax, which could be material, in order to maintain our REIT qualification. If we did not qualify for that “savings” provision, we would fail to qualify as a REIT. See “— Failure to Qualify.”

Also as discussed above, we have purchased, and may purchase in the future, Agency RMBS through TBAs. There is no direct authority with respect to the qualification of TBAs as real estate assets or government securities for purposes of the 75% asset test. However, we intend to treat our TBAs as qualifying assets for purposes of the 75% asset test based on a legal opinion of Vinson & Elkins L.L.P. substantially to the effect that our TBAs should be qualifying assets for purposes of the 75% asset test to the