Real
estate
investment
trust


Redwood
Trust
is
expected
to
close
on
Tuesday
on
the
offering
of
$85
million
in
debt,
following
on
the
heels
of
other
companies
in
this
space. Analysts
say
the
resources
could
be
used
to
buy
back
other
outstanding
notes
or
improve
the
company’s
cash
position
in
the
near
term. 

Redwood’s
unsecured
debt
consists
of
senior
notes
due
in
2029
that
pay
9%
annually.
The
offering
can
be
increased
by
$12.75
million
in
aggregate
principal
amount
available
for
30
days
to
cover
over-allotments.

The
company
said
the
proceeds
of
the
debt
offering
are
expected
to
fund,
among
other
things,
the
firm’s

residential
lending
business,
the
acquisition
of
mortgage-backed
securities
(MBS),
and
strategic
acquisitions
and
investments. 

It
can
also
repay
indebtedness,
such
as
a
subsidiary’s
5.75%
exchangeable
senior
notes
due
in
2025
and
Redwood’s
7.75%
convertible
senior
notes
due
in
2027.

BTIG
analysts
Eric
Hagen
and
Jake
Katsikas
estimate
that
the
debt
offering
will
bring
the
company’s
total
unsecured
debt
stack
to
$850
million,
supported
by
about
$1
billion
in
stockholder
equity.

According
to
the
analysts,
at
wider
spreads,
the
company
“could
look
to
buy
back
its
2025
and
2026
notes
with
a
portion
of
the
proceeds.”

In
the
near
term,
however,
the
analysts
expect
Redwood’s
leadership
to
“opportunistically
keep
a
higher
cash
balance,”
mainly
because
a
new
facility
will
provide
$150
million
in
borrowing
capacity. 

Morgan
Stanley;

Goldman
Sachs;

RBC
Capital
Markets;

Wells
Fargo
Securities;

Keefe,
Bruyette
&
Woods;

and
Piper
Sandler
were
the
book-running
managers
for
the
offering. The
notes,
which
had
an
investment
grade
rating
of
BBB
from

Egan-Jones
Ratings
Co.,
are
expected
to
be
listed
on
the

New
York
Stock
Exchange. 

Other
companies
in
the
space
have
also
recently
issued
or
are
about
to
issue
debt.

loanDepot
plans
to
extend
its

$497.8
million
in
senior
notes
due
in
the
fourth
quarter
of
2025. Mr.
Cooper

issued
senior
notes
to
qualified
investors
in
January
that
will
mature
in
2032
and
bear
interest
at
7.125%
per
year.

In
addition,


Pennymac
issued
new
debt
last
year
that
will
mature
in
December
2029
and
pay
7.875%
annually.
And

Rithm
Capital
priced
an
offering
of

$775
million
in
aggregate
principal
of
senior
unsecured
notes
due
in
2029
at
8%
per
year.

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