Redwood Trust has priced a $125 million debt offering, with some of the proceeds going to fund its three mortgage banking platforms, the company said.
The 9.75% senior notes due 2031 will be traded on the New York Stock Exchange, if approved, starting 30 days after issuance. The deal is expected to close on May 27.
The underwriters have an option to purchase an additional $18.75 million of these notes to cover over allotments.
Redwood Trust does not intend to seek a rating on these notes, the prospectus said.
The real estate investment trust intends to use the net proceeds for general corporate purposes. This includes funding for its Sequoia, Aspire, and CoreVest mortgage banking platforms, as well as being used to acquire related assets for its Redwood Investments portfolio, along with pursuing strategic acquisitions and investments.
Sequoia is an
Payments will be made quarterly starting Sept. 1, and every three months hence.
Joint book-running managers for the offering are: Morgan Stanley; RBC Capital Markets; UBS Investment Bank; Wells Fargo Securities; Goldman Sachs; and Piper Sandler. Mischler Financial Group and Seaport Global Securities are acting as co-managers.
Keefe, Bruyette & Woods raised its forward estimates for Redwood Trust on May 3, citing "positive mortgage banking trends."
It raised both 2026 and 2027 estimates for earnings available for distribution (a non-GAAP metric) to $1.12 per share for both years, from $1 and $1.10 respectively.
"Our increased estimates suggest stable funding volumes and margins within its mortgage banking and the continued run-off of its legacy investments, which management expects to represent less than 10% of total capital by year-end 2026," wrote Bose George, an analyst at KBW.
For the first quarter, Sequoia had net income of $37.8 million and Aspire $2.3 million. CoreVest lost $3.4 million, while the final core segment, Redwood Investments, lost $8 million.
The CoreVest net loss was a result of $5 million of expenses related to organizational changes during the first quarter.
The company reported a first quarter GAAP net loss of $7.3 million.
"While there is still likely near-term noise from its legacy portfolio, we expect continued growth across Sequoia and Aspire, positive execution under
Redwood Trust was not the only REIT tapping the debt markets in May.
In a deal that was completed on May 19, Blackstone Mortgage Trust did a private offering of $450 million of senior secured notes due 2031. The interest rate is 6.25%.
Net proceeds were used for general corporate purposes, including paying down existing debt. The transaction was priced on May 5.
On May 11,
