Redwood Trust values $90 million in securities Investing.com
MILL VALLEY, Calif. – Redwood Trust, Inc. (NYSE:RWT), an $849 million market capitalization specialty finance company, announced the price of a public offering of $90 million in 9.125% senior notes due 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 has also maintained 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 bonds, which will be listed on the New York Stock Exchange under the symbol “RWTP” if approved, will begin trading within one month of issuance. Egan-Jones Ratings Company assigned the bonds an investment rating of BBB-. Interest on the bonds will be paid quarterly beginning June 1, 2025. Currently trading at $6.40 per share, Redwood Trust offers investors a substantial dividend yield of 11.46%. For a deeper look 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 its mortgage banking operations, acquiring mortgage-backed securities, making other long-term investments, making strategic acquisitions and repaying existing debt. This may include repurchasing or repaying portions of its 5.75% convertible senior notes due 2025 or 7.75% convertible senior notes due 2027.
The notes will be unsecured senior obligations of Redwood Trust and will be available in minimum denominations of $25 or multiples. Redwood reserves the right to redeem the notes, in whole or in part, at any time after March 1, 2027, for the principal amount plus 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 amount, plus accrued interest.
The joint bookkeeping managers for the offer include 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-manager.
The offering is being made pursuant to 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 a disclaimer that it does not constitute an offer to sell or the solicitation of an offer to buy securities, nor will there be any sale of these securities in any state or jurisdiction where such offer, solicitation or sale would be illegal prior to registration or qualification under the securities laws of such state or jurisdiction. Based on InvestingProThrough fair 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 from Redwood Trust, Inc.
In other recent news, Redwood Trust Inc (NYSE:). reported mixed financial results for the fourth quarter of 2024, with preliminary data indicating a decline in book value per common share. This decline is primarily attributable to higher benchmark interest rates and additional credit-related declines in bridging loan valuations. Despite these challenges, Redwood Trust secured $2.2 billion in loans during the third quarter and announced a joint venture with CPP Investments, demonstrating its focus on non-agency housing finance solutions for 2025.
In a recent move, Redwood Trust expanded its real estate equity platform, Aspire, to include alternative lending products and refreshed the branding of its Sequoia jumbo loan platform. The company also disclosed executive compensation packages for its top executives, including Chief Executive Officer Christopher J. Abate, as part of its strategy to incentivize and retain key leadership.
However, JPMorgan downgraded shares of Redwood Trust from Overweight to Neutral due to potential challenges in the company’s credit performance. Despite this, Redwood Trust reported an increase in earnings available for distribution to $25 million in the third quarter of 2024. These are recent developments that reflect Redwood Trust’s ongoing operations and financial performance.
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