Redwood Trust Prices Reopening of $40 Million of 7.75% Convertible Senior Notes Due 2027
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 09 2024
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Should l Buy RWT?
Source: Newsfilter
Redwood Trust's Convertible Notes Offering: Redwood Trust, Inc. has priced approximately $40 million in 7.75% convertible senior notes due 2027 in a private offering, which will close on October 11, 2024. The proceeds are intended for repurchasing outstanding exchangeable senior notes and general corporate purposes.
Terms of the Notes: The notes can be converted into shares of Redwood's common stock at a conversion price of about $10.45 per share, with interest payable semi-annually. Redwood retains the right to redeem the notes under certain conditions, and the offering is not registered under the Securities Act.
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Analyst Views on RWT
Wall Street analysts forecast RWT stock price to rise
8 Analyst Rating
5 Buy
3 Hold
0 Sell
Moderate Buy
Current: 6.680
Low
6.00
Averages
7.50
High
9.50
Current: 6.680
Low
6.00
Averages
7.50
High
9.50
About RWT
Redwood Trust, Inc. is a specialty finance company focused on several distinct areas of housing credit. The Company's segments include Sequoia Mortgage Banking, CoreVest Mortgage Banking, and Redwood Investments. The Sequoia Mortgage Banking segment consists of a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale to whole loan buyers, securitization through its SEMT (Sequoia) private-label securitization program, or transfer into its investment portfolio. The CoreVest Mortgage Banking segment consists of a platform that originates business-purpose lending loans for subsequent securitization, sale, or transfer into its investment portfolio. The Redwood Investments segment consists of organic investments sourced through the Company's mortgage banking operations. Additionally, through RWT Horizons, its venture investing initiative, the Company invests in early-stage companies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Profitability Enhancement: The company reported a GAAP net income of $18.3 million for Q4, translating to $0.13 per share, a significant turnaround from the previous quarter's loss, while non-GAAP earnings available for distribution rose from $0.01 to $0.20, exceeding common dividends and reflecting improved profitability.
- Strategic Growth Outlook: Redwood Trust expects core operating performance to drive consolidated earnings above common dividends in 2026, with plans to launch the Aspire securitization platform in the coming weeks, further solidifying its market position and promoting organic growth.
See More
Redwood Trust RWT Q4 2025 Earnings Call Transcript
See More
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- Net Income Performance: The company achieved a GAAP net income of $18.3 million, translating to $0.13 per basic and diluted share, demonstrating stable profitability amidst market fluctuations and reinforcing its financial foundation.
- Slight Book Value Increase: As of December 31, 2025, the GAAP book value per common share was $7.36, a slight increase from $7.35 on September 30, 2025, reflecting ongoing improvements in asset quality that enhance shareholder value.
- Economic Return Rate: The economic return on book value for Q4 2025 was 2.6%, showcasing the company's effectiveness in capital management, which further enhances its attractiveness to investors.
See More
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See More
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- Preferred Stock Distribution Details: The preferred stock dividends for 2025 are anticipated to be 96% ordinary income and 4% qualified dividends, necessitating shareholders to plan their taxes accordingly to mitigate potential tax burdens.
- REIT Tax Implications: As Redwood operates as a Real Estate Investment Trust (REIT), the portion of qualified dividend income available to shareholders is limited, which may affect their overall tax liabilities and investment returns.
- Investor Consultation Recommendation: The company advises shareholders to consult tax advisors to ensure their tax filings align with Redwood's dividend distribution information, thereby avoiding potential tax issues from misreporting.
See More
