MILL VALLEY, California – Redwood Trust, Inc. (NYSE:RWT), a specialty financial company with a market capitalization of $849 million, announced the pricing of a public offering of $90 million in senior notes with a rate of interest of 9.125%, maturing on March 1, 2030. According to data from InvestingPro, the company maintains solid liquidity with a current ratio of 76.5 times, suggesting solid health financial. The company has also maintained an impressive 30-year track record of consistent dividend payments. The company has also granted the underwriters a 30-day option to purchase up to an additional $13.5 million in notes to cover the over-allotments. The offering is expected to close on January 17, 2025, pending customary closing conditions.
The notes, which will trade on the New York Stock Exchange under the symbol “RWTP” if approved, will begin trading within a month after issuance. Egan-Jones Ratings Company has assigned the bonds 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 substantial 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 its mortgage banking businesses, acquiring mortgage-backed securities, making other long-term investments, strategic acquisitions and repaying existing debt. This may involve repurchasing or redeeming portions of its 5.75% exchangeable senior notes due 2025 or its 7.75% convertible senior notes due 2027.
The notes will be senior unsecured obligations of Redwood Trust and will be available in minimum denominations of $25 or multiples thereof. 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. Additionally, in the event of a change in control, Redwood must offer to repurchase all outstanding notes at 101% of their principal, plus accrued interest.
The joint bookrunners for the offering include Morgan Stanley (NYSE đŸ™‚ & 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 as co-manager.
The offering is being made pursuant to a self-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 website.
This announcement comes with the disclaimer that it does not constitute an offer to sell or a solicitation of an offer to buy the securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. According to InvestingPro’s fair value analysis, the stock currently appears overvalued and is trading at a price-to-book ratio of 0.73. Investors looking for in-depth analysis can access Redwood Trust’s detailed Pro Research Report, which is part of InvestingPro’s coverage of more than 1,400 U.S. 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:). has 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 attributed to higher benchmark interest rates and additional declines in credit-related valuation on bridging loans. Despite these challenges, Redwood Trust secured $2.2 billion in loans during the third quarter and announced a joint venture with CPP Investments, showing its focus on non-institutional housing financing solutions by 2025.
In a recent move, Redwood Trust expanded its home equity platform, Aspire, to include alternative lending products and refreshed the branding of its jumbo lending platform Sequoia. The company also revealed executive compensation packages for its senior executives, including CEO Christopher J. Abate, as part of its strategy to incentivize and retain key leadership.
However, JPMorgan downgraded Redwood Trust shares 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 activities and financial performance.
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