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, maturing on March 1, 2030. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 76.5x, suggesting robust financial health. The company has also maintained an impressive 30-year track record of consistent dividend payments. The company has also granted 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 a month after issuance. Egan-Jones Ratings Company has assigned the notes an investment-grade rating of BBB-. The interest on the notes will be paid quarterly starting 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 funding its mortgage banking businesses, acquiring mortgage-backed securities, making other long-term investments, strategic acquisitions, and repaying existing debts. This may involve repurchasing or repaying parts of its 5.75% exchangeable senior notes due in 2025 or its 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 in multiples thereof. Redwood reserves the right to redeem the notes, in whole or in part, at any time after March 1, 2027, at the principal amount plus accrued interest. Additionally, in the event of a control change, Redwood must offer to repurchase all outstanding notes at 101% of their principal, plus accrued interest.
The joint book-running managers for the offering include Morgan Stanley (NYSE:MS) & Co. LLC, Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, Wells Fargo (NYSE:WFC) Securities, LLC, Keefe, Bruyette & Woods, Inc., and Piper Sandler & Co., with Citizens JMP Securities, LLC serving as co-manager.
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 does not constitute an offer to sell or a solicitation of an offer to buy the securities, nor will there be any sale of these securities in any state or jurisdiction where such an offer, solicitation, or sale would be unlawful before registration or qualification under the securities laws of such state or jurisdiction. Based on InvestingPro's Fair Value analysis, the stock currently appears overvalued, trading at a price-to-book ratio of 0.73. Investors seeking 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 recent news, Redwood Trust Inc (NYSE:RWT). has reported mixed financial results for the fourth quarter of 2024, with preliminary data indicating a decrease in book value per common share. This decline is primarily attributed to higher benchmark interest rates and additional credit-related valuation declines on bridge loans. Despite these challenges, Redwood Trust secured $2.2 billion in loans during Q3 and announced a joint venture with CPP Investments, showcasing its focus on non-agency housing finance solutions for 2025.
In a recent move, Redwood Trust expanded its home equity platform, Aspire, to include alternative loan products, and refreshed the branding of its Sequoia jumbo loan platform. The company also disclosed executive compensation packages for its top executives, including CEO Christopher J. Abate, as part of its strategy to incentivize and retain key leadership.
However, JPMorgan downgraded Redwood Trust's stock 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 Q3 2024. These are recent developments, reflecting the ongoing activities and financial performance of Redwood Trust.
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