Terms

Series

10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

10%

Rate Type

Fixed To Floating

Annual Dividend

$2.50

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

April 15, 2028

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of Redwood Trust, Inc., Indebtedness And Liabilities Of Subsidiaries, Any Future Preferred Equity Specifically Ranking Senior; Pari Passu With: Any Future Preferred Stock With Terms Specifically Providing Parity Ranking; Senior To: Common Stock, All Other Equity Securities Not Specifically Ranked Pari Passu Or Senior

Regulatory (Basel III) Call

No

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

2,600,000

Prospectus Summary

Redwood Trust, Inc. (NYSE: RWT), a Maryland-based REIT focused on specialty housing finance, is offering 2,600,000 shares of its 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock at a liquidation preference of $25.00 per share. Dividends are paid quarterly (January 15, April 15, July 15, October 15) at a fixed 10% annual rate ($2.50/share) through April 14, 2028, then reset every five years to the prevailing 5-year U.S. Treasury Rate plus a spread of 627.8 basis points. The first call date is April 15, 2028 at $25.00. Importantly, this is a cumulative preferred: any unpaid dividends accumulate and must be paid in full before any distributions can be made to common stockholders, providing meaningful downside protection to preferred holders. The Series A Preferred Stock sits senior to all of Redwood's common equity and any undesignated junior equity, and ranks pari passu with any future parity preferred. However, it is effectively junior to all of Redwood's debt — approximately $13.2 billion of indebtedness and liabilities as of September 30, 2022. Because Redwood is a holding company, the preferred is also structurally subordinated to the obligations of its operating subsidiaries, which have no legal obligation to upstream funds. There is no bank-regulatory Tier 1 capital call provision; the sole early redemption carve-out before April 15, 2028 is a REIT-qualification preservation redemption and a Change-of-Control special optional redemption (within 120 days of a qualifying change of control). Existing or future debt covenants could restrict dividend payments on the preferred. At the $25.00 offering price, the initial fixed-rate yield is 10.00% annually. Because Redwood is a REIT, its dividends are generally characterized as ordinary income (not qualified dividend income eligible for the 15%/20% preferential tax rate), making them less tax-efficient for individual investors and ineligible for the corporate dividends-received deduction. Dividends are paid quarterly in arrears; the first record date is March 31, 2023 with payment on April 15, 2023. If Redwood fails to pay dividends for six or more quarterly periods (whether or not consecutive), preferred holders gain the right to elect two directors to the board — a protective mechanism, but not a guarantee of payment. Existing or future debt agreements could further restrict Redwood's ability to declare or pay preferred dividends.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Redwood Trust fails to pay dividends on the Series A Preferred Stock, it generally cannot pay dividends on common stock or other junior securities; additionally, existing or future debt covenants may block the company from authorizing or paying preferred dividends altogether.

Other Preferreds from Redwood Trust Inc

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 48 (Average)