MILL VALLEY, Calif. & TORONTO - Redwood Trust, Inc. (NYSE: NYSE:RWT), a company specializing in housing credit, and Canada Pension Plan Investment Board (CPP Investments), announced a strategic capital partnership valued at $750 million. The alliance includes a $500 million Asset Joint Venture and a $250 million corporate secured financing facility provided by CPP Investments to Redwood.
The Joint Venture will invest in Redwood's residential investor bridge and term loans, aiming for over $4 billion in acquisitions. Redwood and its subsidiaries will manage the assets for the Joint Venture. Equity contributions will be up to $500 million, with CPP Investments providing 80% and Redwood 20%. Redwood stands to earn administrative and potential performance fees.
The financing facility has a two-year term with a one-year extension option and is designed with revolving capacity to facilitate the growth of Redwood's mortgage banking platforms. Additionally, CPP Investments will receive warrants to acquire Redwood common stock, initially worth about $15 million, with the option for an additional $36 million upon meeting certain conditions.
Christopher Abate, CEO of Redwood, expressed enthusiasm for the partnership, highlighting its alignment with Redwood's growth strategy and potential to scale its mortgage banking business. David Colla of CPP Investments also remarked on the opportunity to invest in U.S. residential mortgage assets with Redwood.
This news is based on a press release statement.
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