MILL VALLEY, Calif. – Redwood Trust, Inc. (NYSE:RWT), a specialty finance company with a market capitalization of $849 million, announced the pricing of a public offering of $90 million in senior notes with a 9.125% interest rate, maturity. on March 1, 2030. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 76.5x, suggesting strong financial health. The company also maintains an impressive 30-year track record of consistent dividend payments. The company also granted the underwriters a 30-day option to purchase up to an additional $13.5 million in notes to cover over-allotments. The offering is expected to close on January 17, 2025, pending customary closing conditions.

The notes, which will be listed on the New York Stock Exchange under the symbol “RWTP” if approved, are set to begin trading within one month of issuance. Egan-Jones Ratings Company has assigned the notes an investment-grade rating of BBB-. Interest on the notes will be paid quarterly beginning June 1, 2025. Currently trading at $6.40 per share, Redwood Trust offers investors a great dividend yield of 11.46%. For deeper insights into Redwood Trust’s financial metrics and growth potential, InvestingPro subscribers have access to over 30 additional financial metrics and exclusive ProTips.

Redwood Trust plans to use the net proceeds for general corporate purposes, which may include financing mortgage banking businesses, acquiring mortgage-backed securities, making other long-term investments, strategic acquisitions, and repayment of current liabilities. This could include buying back or paying down portions of its 5.75% convertible senior notes due in 2025 or the 7.75% convertible senior notes due in 2027.

The notes will be unsecured senior obligations of Redwood Trust and will be available in minimum denominations of $25 or multiples thereof. Redwood has the right to redeem the notes, in whole or in part, at any time after March 1, 2027, in principal amount and accrued interest. In addition, in the event of a change of control, Redwood must offer to repurchase all outstanding notes at 101% of their principal, plus accrued interest.

The joint book-running managers for the offer included Morgan Stanley (NYSE:) & Co. LLC, Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, Wells Fargo (NYSE:) Securities, LLC, Keefe, Bruyette & Woods, Inc., and Piper Sandler & Co., with Citizens JMP Securities, LLC serving as co-managers.

The offering is being made under an automatic shelf registration statement filed with the SEC on March 4, 2022. The terms of the offering are detailed in the preliminary prospectus supplement and accompanying prospectus available on the SEC’s website.

This announcement comes with the disclaimer that it is not an offer to sell or a solicitation of an offer to buy securities, nor is there any sale of these securities in any state or jurisdiction where such offer , solicitation, or sale may be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. Based on InvestingProFair Value analysis, the stock currently appears overvalued, trading at a price-to-book ratio of 0.73. Investors looking for comprehensive analysis can access Redwood Trust’s detailed Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

The information provided in this article is based on a press release statement from Redwood Trust, Inc.

In other breaking news, Redwood Trust Inc (NYSE:). reported mixed financial results for the fourth quarter of 2024, with preliminary data showing a decline in book value per common share. This decline was primarily due to higher benchmark interest rates and additional credit-related valuation declines in bridge loans. Despite these challenges, Redwood Trust secured $2.2 billion in loans during Q3 and announced a joint venture with CPP Investments, reflecting its focus on non-agency housing finance solutions for in 2025.

In a recent move, Redwood Trust expanded its home equity platform, Aspire, to include alternative loan products, and refreshed the branding of the Sequoia jumbo loan platform. The company also disclosed executive compensation packages for top executives, including CEO Christopher J. Abate, as part of its strategy to motivate and retain key leadership.

However, JPMorgan downgraded Redwood Trust stock from Overweight to Neutral due to potential challenges to the company’s credit performance. Despite this, Redwood Trust reported an increase in earnings available for distribution to $25 million in Q3 2024. These are new developments, reflecting ongoing activities and financial done by the Redwood Trust.

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