Redwood Trust plans to end REIT status for 2027
A new tax-benefits rights plan is intended to protect approximately $304 million in U.S. federal NOLs from an ownership change.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Redwood Trust, Inc. approved a plan to revoke its REIT election for 2027. It currently expects to file with the IRS on or before March 31, 2027, which would make C-corporation status effective January 1, 2027; Redwood expects to remain a REIT for 2026. The company estimates the conversion would increase GAAP book value per share by $0.73–$0.77 in Q4 2026.
Redwood plans a $50 million exchange offer during the week of November 9, 2026, swapping common stock for new 11.00% Series B preferred stock; it may increase if meaningfully oversubscribed, and has not commenced. Redwood also agreed to repurchase from Hildene Capital Management, LLC $53,125,000 liquidation amount of trust preferred securities for $45,156,250 plus accumulated unpaid distributions, and pay a $500,000 cash fee. A separate common-stock repurchase authorization is up to $40 million.
CPP Investments' secured financing facility increased to $500 million from $400 million and was extended through March 2030; the joint venture commitment was extended to March 2030. The warrants' exercise price was set at $4.90 per share and their exercise period extended until March 2032, with up to 452,911 additional shares possible in certain make-whole events. A one-for-five reverse split is expected to take effect December 31, 2026, with split-adjusted trading expected January 4, 2027. Rights generally become exercisable if a person or group acquires 4.9% or more of common stock and certain other securities.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate point. Forward-looking: it has not happened yet and may not happen.Redwood estimates a $0.73–$0.77 per-share GAAP book value increase in Q4 2026.
Negative
- None.
Filing Explained
Redwood’s rights plan is adopted; rights become exercisable only after a trigger, when eligible holders may receive discounted shares, conditionally diluting ownership.
This filing makes the waiver of Redwood’s REIT-maintenance covenant effective only on the final deposit date; the C-corporation conversion itself remains pending an IRS revocation filing. When the conversion is completed, the charter’s transfer and ownership restrictions on capital stock, including related restrictions in the Series A preferred-stock terms, cease to apply.
The final of three deposits is due on the earlier of the formal REIT revocation filing and
One right attaches to each common share held on
If no earlier redemption, exchange, or other specified termination occurs, rights expire
8-K Event Classification
Key Figures
Key Terms
REIT Maintenance Covenant regulatory
liquidation amount financial
NOLs financial
ownership change regulatory
Make-Whole Fundamental Change Event financial
Stock Split
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What are the terms of RWT's planned exchange offer?
When does RWT's one-for-five reverse stock split take effect?
What does RWT's tax benefits preservation plan provide?
When is the final payment due for RWT's trust preferred securities repurchase?
What changed in RWT's warrants with CPP Investments?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name
of each exchange on which registered |
Item 1.01. Entry into a Material Definitive Agreement.
The information set forth in Item 3.03 of this Current Report is incorporated into this Item 1.01 by reference.
Waiver and Repurchase Agreement
On November 3, 2026, Redwood Trust, Inc. (the “Company” or “Redwood”) entered into a Waiver and Repurchase Agreement (the “Agreement”) with Hildene Capital Management, LLC (the “Investor”), acting for itself and on behalf of its managed entities, relating to the trust preferred securities issued by Redwood Capital Trust I (the “Trust Preferred Securities”) under the Amended and Restated Trust Agreement, dated as of December 12, 2006 (the “Trust Agreement”) and the related Junior Subordinated Notes due 2037 of the Company (the “Notes”) issued under the Junior Subordinated Indenture, dated as of December 12, 2006 (the “Indenture”). Under the Indenture, the Company is required to use its reasonable best efforts to meet the requirements to qualify as a REIT (as defined below) (the “REIT Maintenance Covenant”). Pursuant to the Indenture and the Trust Agreement, the Company may omit to comply with the REIT Maintenance Covenant if a majority in aggregate principal amount of the outstanding Notes and a majority in aggregate liquidation amount of the outstanding Trust Preferred Securities waive such compliance.
Under the Agreement, the Investor and its managed entities, as holders of a majority of the aggregate liquidation amount of the outstanding Trust Preferred Securities, agreed to (i) waive generally the Company’s compliance with the REIT Maintenance Covenant and (ii) approve and direct the property trustee under the Trust Agreement, as holder of the Notes, to waive generally the Company’s compliance with the REIT Maintenance Covenant, effective on the Last Deposit Date (as defined below).
In addition, the Company agreed to repurchase from the Investor an aggregate $53,125,000 liquidation amount of Trust Preferred Securities at a price equal to 85% of the liquidation amount thereof, or $45,156,250 (the “Aggregate Repurchase Price”), plus any accumulated but unpaid distributions thereon. The Company will pay deposits for the Aggregate Repurchase Price in three installments, with the last installment payment to occur on the earlier of (x) the date of the Company’s formal revocation of its election to be taxed as a REIT and (y) February 15, 2027 (the “Last Deposit Date”). The Company also agreed to pay the Investor a cash fee of $500,000.
A copy of the Agreement is filed as Exhibit 1.1 to this Current Report. This description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement filed as an exhibit to this Current Report and incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 8.01 below under the caption “Joint Venture and Secured Financing Facility” is incorporated by reference into this Item 3.02. Any additional shares of Common Stock (as defined below) issued or issuable upon exercise of the Amended Warrants (as defined below) will be issued in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), in transactions not involving a public offering or in reliance upon Section 3(a)(9) of the Securities Act as involving an exchange by the Company exclusively with its security holders.
Item 3.03. Material Modification to Rights of Security Holders.
Plan for C-Corp. Conversion – Impact on Corporate Charter’s Restrictions on Transfer/Ownership of Capital Stock
As described in Item 8.01 below, the Company has announced that the Board of Directors of the Company (the “Board”) unanimously approved a plan to revoke the Company’s election to be treated as a real estate investment trust (“REIT”) for U.S. federal income tax purposes in the first quarter of 2027 and transition to a C corporation beginning with its 2027 taxable year (the “C-Corp. Conversion Plan”). Under the C-Corp. Conversion Plan, the Board has determined it is in the Company’s best interests to continue to maintain its REIT status for the taxable year ending December 31, 2026 and to remain in compliance with the requirements for taxation as a REIT during 2027 until such time as the Company makes a filing with the Internal Revenue Service (“IRS”) to revoke the Company’s election to be taxed as a REIT pursuant to Section 856(g)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), for the taxable year beginning on January 1, 2027 (the “REIT Status Revocation Filing”).
Accordingly, under the C-Corp. Conversion Plan, the restrictions on transfer and ownership of shares of capital stock of the Company set forth in Article XI of the Company’s Articles of Amendment and Restatement and the related restrictions on transfer and ownership in the terms of the Series A preferred stock (the Articles of Amendment and Restatement, as amended and supplemented, the “Charter”) will cease to be in effect upon the consummation of the C-Corp. Conversion Plan. The Company intends to file a Certificate of Notice with the State Department of Assessments and Taxation of Maryland (“SDAT”) and to file such Certificate of Notice with the Securities and Exchange Commission on a Current Report on Form 8-K promptly thereafter.
Adoption of Tax Benefits Preservation Plan
On November 3, 2026, the Board adopted a tax benefits preservation plan and declared a dividend of one right (a “Right”) for each outstanding share of common stock of the Company, par value $0.01 per share (“Common Stock”), to stockholders of record at the close of business on November 16, 2026 (the “Record Date”). Each Right entitles its holder, subject to the terms of the Tax Benefits Preservation Plan (as defined below), to purchase from the Company one one-thousandth of a share of Series X Junior Participating Preferred Stock, par value $0.01 per share (“Series X Preferred Stock”), of the Company at an exercise price of $20.00 per Right, subject to adjustment. The description and terms of the Rights are set forth in a tax benefits preservation plan, dated as of November 3, 2026 (the “Tax Benefits Preservation Plan”), by and between the Company and Computershare Trust Company, N.A., as rights agent (and any successor rights agent, the “Rights Agent”).
The Company adopted the Tax Benefits Preservation Plan in order to protect against a possible limitation on the Company’s ability to use its net operating losses (the “NOLs”) and certain other tax attributes to reduce potential future U.S. federal income tax obligations. The NOLs and certain other tax attributes are valuable assets to the Company, which may inure to the benefit of the Company. However, if the Company experiences an “ownership change,” as defined in Section 382 of the Code, its ability to fully utilize the NOLs and certain other tax attributes could be substantially limited and the timing of the usage of the NOLs and other tax attributes could be substantially delayed, which could significantly impair the value of such attributes. Generally, an “ownership change” would occur if the Company’s “5-percent shareholders” increase their ownership of Company stock by more than 50 percentage points over the lowest percentage owned by such shareholders at any time over a rolling three-year period, as determined under Section 382 of the Code and the regulations thereunder. The Tax Benefits Preservation Plan is intended to prevent such an “ownership change.”
The Tax Benefits Preservation Plan is not expected to interfere with any merger or other business combination approved by the Board.
The Rights. The Rights will attach to any shares of Common Stock that become issued and outstanding after the Record Date and prior to the earlier of (a) the Distribution Time (as defined below) and (b) the Expiration Time (as defined below), and in certain other circumstances described in the Tax Benefits Preservation Plan.
Until the Distribution Time, the Rights are associated with Common Stock and evidenced by Common Stock certificates or, in the case of uncertificated shares of Common Stock, the book-entry account that evidences record ownership of such shares. Until the Distribution Time, the Rights are transferable with—and only with—the underlying shares of Common Stock.
Until the Distribution Time, the surrender for transfer of any shares of Common Stock will also constitute the transfer of the Rights associated with those shares. As soon as practicable after the Distribution Time, separate rights certificates will be mailed to holders of record of Common Stock as of the Distribution Time. From and after the Distribution Time, the Rights will be represented solely by the separate rights certificates.
The Rights are not exercisable until the Distribution Time. Until a Right is exercised, its holder will have no rights as a stockholder of the Company, including the right to vote or to receive dividends.
Separation and Distribution of Rights; Exercisability. Subject to certain exceptions, the Rights become exercisable and trade separately from Common Stock only upon the “Distribution Time,” which occurs upon the earlier of:
| · | the close of business on the tenth (10th) day after the “Stock Acquisition Date” (which is defined as (a) the first date of public announcement that any person or group has become an Acquiring Person (as defined below) or (b) such other date, as determined by the Board, on which a person or group has become an Acquiring Person); and |
| · | the close of business on the tenth (10th) business day (or such later date as may be determined by the Board prior to such time as any person or group becomes an Acquiring Person) after the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person, unless such tender or exchange offer is conditioned on the redemption of the Rights or termination of the Tax Benefits Preservation Plan. |
An “Acquiring Person” is defined as a person or group that, together with its affiliates and associates, beneficially owns at least 4.9% (the “Specified Percentage”) of either of (x) the Company Securities, consisting of the outstanding shares of Common Stock, shares of preferred stock (other than certain non-voting, non-participating preferred stock), warrants, rights, convertible debt or options to purchase stock of the Company, and any other interest that would be treated as “stock” of the Company for purposes of Section 382 of the Code and the regulations thereunder (collectively, the “Company Securities”), with beneficial ownership and percentage ownership of Company Securities determined under the constructive ownership rules of Section 382 of the Code and the regulations thereunder or (y) the outstanding shares of Common Stock, with beneficial ownership of Common Stock determined under Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the other provisions of the Tax Benefits Preservation Plan described below.
An Acquiring Person does not include:
| · | the Company or any subsidiary of the Company; |
| · | any officer, director or employee of the Company or any subsidiary of the Company in his or her capacity as such; |
| · | any employee benefit plan of the Company or of any subsidiary of the Company or any entity or trustee holding (or acting in a fiduciary capacity in respect of) shares of capital stock of the Company for or pursuant to the terms of any such plan or for the purpose of funding other employee benefits for employees of the Company or any subsidiary of the Company; |
| · | any person or group, together with its affiliates and associates, whose beneficial ownership of at least the Specified Percentage will not jeopardize or endanger the availability to the Company of any NOL or other tax attribute, as determined by the Board in its sole discretion prior to the time any person becomes an Acquiring Person (provided that such person will be an Acquiring Person if the Board subsequently makes a contrary determination in its sole discretion, regardless of the reason for such contrary determination); or |
| · | any person or group that, together with its affiliates and associates, as of immediately prior to the first public announcement of the adoption of the Tax Benefits Preservation Plan, beneficially owns at least the Specified Percentage, so long as such person or group continues to beneficially own at least the Specified Percentage and does not acquire securities of the Company to beneficially own an amount greater than or equal to the greater of (a) the Specified Percentage and (b) the sum of the lowest beneficial ownership of such person or group since the public announcement of the adoption of the Tax Benefits Preservation Plan plus (x) for persons with beneficial ownership of more than 5.0%, 0.5% of the then outstanding shares of Common Stock or (y) for all other persons, one share of Common Stock. |
In addition, the Tax Benefits Preservation Plan provides that no person or group will become an Acquiring Person (1) as a result of a repurchase or other acquisition of securities of the Company by the Company that, by reducing the number of securities outstanding, increases such person’s percentage ownership or (2) solely as a result of any unilateral grant of any security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers or employees; however, a person or group that becomes a beneficial owner of at least the Specified Percentage as a result of either of the foregoing will become an Acquiring Person if it thereafter acquires beneficial ownership of any additional securities of the Company (other than pursuant to a dividend, distribution, split or subdivision), unless after such acquisition it beneficially owns less than the Specified Percentage. Also, a person or group will not be an Acquiring Person if the Board determines in its sole discretion that such person or group has become an Acquiring Person inadvertently and such person or group has already divested or, if requested by the Company, divests as promptly as practicable a sufficient number of securities of the Company so that such person or group would no longer be an Acquiring Person. The Board is in no case required to except a person or group from the definition of “Acquiring Person” due to inadvertence. A bona fide swaps dealer also will not be an Acquiring Person if the Board determines that its ordinary course actions were taken without the intent or effect of evading the purposes of the Tax Benefits Preservation Plan or seeking to control or influence the Company, subject to revocation by the Board. There are also certain exceptions for an “investment advisor” to mutual funds or a trustee of trusts qualified under Section 401(a) of the Code sponsored by unrelated corporations, unless the Board determines, in its reasonable discretion, that such investment advisor or trustee is deemed to beneficially own at least the Specified Percentage under specified regulations promulgated under the Code.
Certain synthetic interests in securities created by derivative positions—regardless of whether such interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D-G under the Exchange Act—are treated as beneficial ownership of the number of shares of Common Stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of Common Stock are directly or indirectly held by counterparties to the derivatives contracts. For purposes of the Tax Benefits Preservation Plan, a person or group is deemed to beneficially own (i) Company Securities that such person or group is deemed to directly, indirectly or constructively own (as determined for purposes of Section 382 of the Code or the regulations promulgated under the Code) and (ii) shares of Common Stock that such person or group beneficially owns under Rule 13d-3 under the Exchange Act, has the right or obligation to acquire (whether or not currently exercisable), or that are beneficially owned by any other person with which such person or group has any agreement, arrangement or understanding with respect to acquiring, holding, voting or disposing of Common Stock, in each case subject to certain exceptions described in the Tax Benefits Preservation Plan.
Expiration Time. The Rights will expire on the earliest to occur of (a) 5:00 P.M., New York City time, on November 3, 2027 or, if the Tax Benefits Preservation Plan is approved by the Company’s stockholders by a majority of the votes cast at a meeting of stockholders held prior to that time, 5:00 P.M., New York City time, on November 3, 2029 (the “Final Expiration Time”), (b) the time at which the Rights are redeemed by the Company (as described below), (c) the time at which the Rights are exchanged by the Company (as described below), (d) the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board before any person or group becomes an Acquiring Person and (e) the time at which the Board determines that the NOLs and certain other tax attributes are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the NOLs and other tax attributes or materially impair the amount of NOLs and other tax attributes that could be used by the Company in any particular time period, for applicable tax purposes (the earliest of clauses (a), (b), (c), (d) and (e) being herein referred to as the “Expiration Time”).
Flip-in Event. In the event that any person or group (other than certain exempt persons) becomes an Acquiring Person (a “Flip-in Event”), each holder of a Right (other than such Acquiring Person, any of its affiliates or associates or certain transferees of such Acquiring Person or of any such affiliate or associate, whose Rights automatically become null and void) will have the right to receive, upon exercise, Common Stock having a value equal to two (2) times the exercise price of the Right.
Flip-over Event. In the event that, at any time following the Stock Acquisition Date, any of the following occurs (each, a “Flip-over Event”):
| · | the Company consolidates with, or merges with and into, any other entity, and the Company is not the continuing or surviving entity; |
| · | any entity engages in a share exchange with or consolidates with, or merges with or into, the Company, and the Company is the continuing or surviving entity and, in connection with such share exchange, consolidation or merger, all or part of the outstanding shares of Common Stock are changed into or exchanged for stock or other securities of any other entity or cash or any other property; or |
| · | the Company sells or otherwise transfers, in one transaction or a series of related transactions, 50% or more of the Company’s assets, cash flow or earning power, |
each holder of a Right (except Rights that previously have been voided as described above) will have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two (2) times the exercise price of the Right.
Series X Preferred Stock Provisions. Each share of Series X Preferred Stock, if issued:
| · | will not be redeemable; |
| · | will rank junior to all other series of the Company’s preferred stock, including the Company’s outstanding Series A preferred stock, as to dividends and distributions; |
| · | will entitle the holder thereof, when, as and if authorized by the Board and declared by the Company, to quarterly dividend payments equal to the greater of $1.00 per share and 1,000 times the amount of all cash dividends plus 1,000 times the amount of non-cash dividends or other distributions paid on one share of Common Stock; |
| · | will entitle the holder thereof to receive $1,000 plus accrued and unpaid dividends per share upon liquidation; |
| · | will have the same voting power as 1,000 shares of Common Stock; and |
| · | if shares of Common Stock are exchanged by means of a merger, consolidation or a similar transaction, will entitle the holder thereof to a per share payment equal to the payment made on 1,000 shares of Common Stock. |
Anti-dilution Adjustments. The exercise price payable—and the number of shares of Series X Preferred Stock or other securities or property issuable—upon exercise of the Rights are subject to adjustment from time to time to prevent dilution:
| · | in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Series X Preferred Stock; |
| · | if holders of the Series X Preferred Stock are granted certain rights, options or warrants to subscribe for Series X Preferred Stock or convertible securities at less than the current market price of the Series X Preferred Stock; or |
| · | upon the distribution to holders of the Series X Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). |
With certain exceptions, no adjustment in the exercise price will be required until cumulative adjustments amount to at least 1% of the exercise price. No fractional shares of Series X Preferred Stock will be issued. Instead, holders that would otherwise receive a fractional share of Series X Preferred Stock will be paid an amount of cash based on the current market value of the Series X Preferred Stock at the closing of the trading day immediately prior to exercise.
Redemption; Exchange. The Board may, at its option, at any time prior to the earlier of (i) such time as any person or group becomes an Acquiring Person and (ii) the Final Expiration Time, direct the Company to redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to adjustment and payable in cash, Common Stock or other consideration deemed appropriate by the Board). Immediately upon the action of the Board authorizing any redemption—or at a later time as the Board may establish for the effectiveness of the redemption—the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price.
At any time after any person or group becomes an Acquiring Person but before any Acquiring Person, together with all of its affiliates and associates, becomes the beneficial owner of 50% or more of the outstanding shares of Common Stock, the Company may exchange the Rights (other than Rights owned by the Acquiring Person, any of its affiliates or associates or certain transferees of the Acquiring Person or of any such affiliate or associate, whose Rights will have become null and void), in whole or in part, at an exchange ratio of one share of Common Stock, or one one-thousandth of a share of Series X Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment).
Exemption Requests. A person desiring to either (i) effect a transaction that might result in such person becoming a beneficial owner of at least the Specified Percentage or (ii) effect a transaction that might result in such person owning additional securities of the Company when such person already owns at least the Specified Percentage, may, by following the procedures outlined in the Tax Benefits Preservation Plan, request that the Board determine that such person would not be an Acquiring Person. The Board is not required to consider or respond to any such request, and a failure by the Board to respond within 30 calendar days after receipt of a request constitutes a denial. In such case, the Board may grant the exemption notwithstanding the effect on the Company’s NOLs and other tax attributes, if the Board determines that such exemption is in the best interests of the Company. The Board may impose any conditions that it deems reasonable and appropriate in connection with any such determination, including restrictions on the ability of the requesting person to transfer securities of the Company acquired by it in the transaction requiring approval.
Amendment of the Tax Benefits Preservation Plan. The Company and the Rights Agent may from time to time amend or supplement the Tax Benefits Preservation Plan without the consent of the holders of the Rights. However, on or after the Stock Acquisition Date, no amendment can materially adversely affect the interests of the holders of the Rights (other than the Acquiring Person, any of its affiliates or associates or certain transferees of the Acquiring Person or of any such affiliate or associate).
Miscellaneous. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) or for common stock of any acquiring company or in the event of the redemption of the Rights as described above.
* * * * *
The foregoing description of the Tax Benefits Preservation Plan and the Rights does not purport to be complete and is qualified in its entirety by reference to the Tax Benefits Preservation Plan, which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Filing of Articles Supplementary
In connection with the adoption of the Tax Benefits Preservation Plan described in Item 3.03 of this Current Report, the Board approved Articles Supplementary, which designate the rights, preferences and privileges of 395,000 shares of a series of the Company’s stock, par value $0.01 per share, designated as Series X Junior Participating Preferred Stock. The information set forth in Item 3.03 of this Current Report is incorporated into this Item 5.03 by reference.
The Articles Supplementary will be filed with the SDAT and become effective on November 4, 2026. A copy of the Articles Supplementary is filed as Exhibit 3.1 hereto and is incorporated herein by reference.
Amended and Restated Bylaws
Effective November 3, 2026, the Board approved the amendment and restatement of the Bylaws of the Company (as so amended and restated, the “Amended and Restated Bylaws”).
The amendments add a clause to Article X, Section 8 providing that, notwithstanding any other provision of the Charter or the Amended and Restated Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute, shall not apply to the voting rights of any shares of stock of the Company acquired and held by any person pursuant to a grant by the Board of a waiver to such person of the stock ownership limitation contained in any tax benefits preservation plan adopted by the Company, but only to the extent that a waiver pursuant to such plan applies to ownership of shares of stock representing 10% or more of the voting power of the Company’s outstanding shares of stock. This change is an addition to the current exclusion in Article X, Section 8 relating to waivers of the stock ownership limit in the Charter.
The preceding description of the provisions amended by the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to, and should be read in connection with, the complete copy of the Amended and Restated Bylaws attached as Exhibit 3.2 to this Current Report and incorporated herein by reference.
Item 8.01. Other Events.
Press Release
On November 3, 2026, the Company issued a press release announcing that the Board unanimously approved the C-Corp. Conversion Plan, plans for a preferred-for-common stock exchange offer, a one-for-five reverse stock split of the Common Stock, and the adoption of the Tax Benefits Preservation Plan. A copy of the press release (the “Corporate Structure Press Release”) is attached as Exhibit 99.1 to this Current Report.
Plan for C- Corp. Conversion
The Company announced that on November 3, 2026, the Board unanimously approved the C-Corp. Conversion Plan. The C-Corp. Conversion Plan will not be completed until the REIT Status Revocation Filing. Under the C-Corp. Conversion Plan, the Company currently expects to make the REIT Status Revocation Filing with the IRS on or prior to March 31, 2027. As a result of the REIT Status Revocation Filing, the Company would become a taxable C corporation effective January 1, 2027. Under the C-Corp. Conversion Plan, the Board has determined it is in the Company’s best interests to continue to maintain its REIT status for the taxable year ending December 31, 2026, and to remain in compliance with the requirements for taxation as a REIT during 2027 until such time as the Company makes the REIT Status Revocation Filing.
In connection with the approval of the C-Corp. Conversion Plan, the Board also approved a related authorization for the repurchase of up to $40 million of our Common Stock, which authorization is separate from, and in addition to, the already existing stock repurchase authorization described in Part II, Item 2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed with the Securities and Exchange Commission on August 5, 2026.
Reverse Stock Split
The Company announced that on November 3, 2026, the Board unanimously approved a reverse stock split of its outstanding shares of Common Stock, at a ratio of one-for-five (the “Reverse Stock Split”). The Reverse Stock Split is expected to take effect at 5:00 p.m. Eastern Time on December 31, 2026 (the “Effective Time”).
As a result of the Reverse Stock Split, at the Effective Time, every five (5) issued and outstanding shares of Common Stock, par value $0.01 per share, will be converted into one (1) share of Common Stock, par value $0.05 per share. The charter amendment effecting the Reverse Stock Split will further provide that the par value of the outstanding shares of Common Stock will be changed from $0.05 per share (as a result of the Reverse Stock Split) back to $0.01 per share. Trading in the Common Stock on a split-adjusted basis is expected to begin at the market open on January 4, 2027.
The Common Stock will continue trading on the New York Stock Exchange under the symbol “RWT,” but will be assigned a new CUSIP number.
The number of shares of the Company’s Series A preferred stock outstanding and their preference amount and dividend rate will not be affected by the Reverse Stock Split.
No fractional shares will be issued in connection with the Reverse Stock Split. The Reverse Stock Split will apply to all of the outstanding shares of Common Stock as of the Effective Time and therefore will not affect any stockholder’s ownership percentage of shares of Common Stock, except for de minimis changes resulting from the payment of cash in lieu of fractional shares.
Joint Venture and Secured Financing Facility
On November 3, 2026, the Company announced an expansion of its strategic capital partnership with Canada Pension Plan Investment Board (“CPP Investments”), including an extension of the commitment period for the joint venture, an upsize and extension of the secured revolving financing facility, and amendments to outstanding warrants (the “Amended Warrants”) previously issued to CPP Investments pursuant to a warrant agreement (as so amended, the “Warrant Agreement”), dated as of March 18, 2024, in connection with the initial closing of the strategic capital partnership. The joint venture commitment period was extended for an additional 18 months, until March 2030. The secured revolving financing facility was upsized to $500 million from $400 million, and the term was extended until March 2030. The Amended Warrants were amended to extend the expiration date of the exercise period for 18 months, until March 2032, to re-strike the exercise price for the warrants at a price of $4.90 per share of Common Stock and to adjust the Dividend Threshold (as defined in the Warrant Agreement) to be $0.00. In addition, the Amended Warrants also provide that if certain corporate events that constitute a “Make-Whole Fundamental Change Event” (as defined in the Amendment (as defined below)) occur, then the number of shares of Common Stock issuable upon exercise of the warrants will, in certain circumstances, be increased for a specified period of time. The maximum additional number of shares of Common Stock that may be issued in connection with a Make-Whole Fundamental Change Event is 452,911, subject to adjustment upon the occurrence of certain events.
The above description of the Amended Warrants is a summary and is not complete. A copy of the Second Amendment to Warrant Agreement, dated November 3, 2026, between Redwood and CPP Investments (the “Amendment”), is filed as Exhibit 4.2 to this Current Report, and the above summary is qualified by reference to the terms of the Amendment set forth in such exhibit.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit 1.1 | Waiver and Repurchase Agreement, by and between the Company and Hildene Capital Management, LLC, dated November 3, 2026 | |
| Exhibit 3.1 | Articles Supplementary, dated November 3, 2026 | |
| Exhibit 3.2 | Amended and Restated Bylaws, dated November 3, 2026 | |
| Exhibit 4.1 | Tax Benefits Preservation Plan, dated as of November 3, 2026, by and between the Company and Computershare Trust Company, N.A., as rights agent (which includes the Form of Rights Certificate as Exhibit B thereto) | |
| Exhibit 4.2 | Second Amendment to Warrant Agreement, dated November 3, 2026, between Redwood and CPP Investments | |
| Exhibit 99.1 | Corporate Structure Press Release issued by the Company on November 3, 2026 | |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 3, 2026 | REDWOOD TRUST, INC. | ||
| By: | /s/ Andrew P. Stone | ||
| Name: | Andrew P. Stone | ||
| Title: | Executive Vice President, Chief Legal Officer, and Secretary | ||
Exhibit 99.1
REDWOOD TRUST PLANS C-CORPORATION
CONVERSION AND PREFERRED-FOR-
COMMON STOCK EXCHANGE OFFER AT A PREMIUM
Planned C-Corporation Conversion Estimated to
Increase GAAP Book Value Per Share by $0.73-$0.77 in
the Fourth Quarter of 2026, with Additional Benefits to Support Long-Term Growth
Exchange Offer Intended to Provide Income-Oriented
Common Stockholders with a High Dividend Preferred
Stock Investment Option
Exchange Offer Accretive to Book Value and Earnings Per Share
Company Adopts Tax Benefits Preservation Rights Plan to Protect Valuable Tax Assets
MILL VALLEY, CA – Redwood Trust, Inc. (NYSE: RWT; “Redwood”, “we”, “us” or the “Company”), a leader in expanding access to housing for homebuyers and renters, today announced that its Board of Directors (the “Board”) has unanimously approved a plan to discontinue the Company’s election to be treated as a real estate investment trust for U.S. federal income tax purposes (“REIT”) and convert to a taxable C-corporation, effective for the calendar year ending December 31, 2027 (the “C-corporation Conversion”).
Redwood also today announced plans for a preferred-for-common stock exchange offer designed to provide existing common stockholders, particularly those who prioritize current income, with an alternative way to participate in the Company's future (the “Exchange Offer”).
“Over the past year, and in light of the Company’s strategic transformation, the Board and management team have been actively reviewing Redwood’s organizational structure, balance sheet, capital allocation priorities and long-term strategic objectives with the assistance of independent financial and legal advisors,” said Greg H. Kubicek, Chair of the Board. “Today’s actions represent an important next step to enhance value and lower our cost of capital as part of the continued evolution of Redwood’s business model.”
C-Corporation Conversion Plan
The C-corporation Conversion plan is expected to deliver three principal economic benefits:
| · | Greater flexibility to retain and reinvest earnings in the Company’s mortgage banking platforms. As part of the C-corporation Conversion plan, the Board is realigning the Company’s quarterly dividend policy to the level of $0.02 per common share – a level consistent with banks, asset managers and specialty finance companies with comparable operating models – allowing the Company to retain and reinvest a greater portion of its earnings. The new quarterly dividend policy is expected to become effective upon the Board’s declaration of the fourth quarter 2026 common stock dividend in December 2026. |
| · | A pathway to a more efficient financing structure and a lower cost of capital. A C-corporation structure, supported by greater earnings retention and a stronger balance sheet, will broaden the Company’s access to institutional unsecured debt and equity capital and provide greater flexibility in future financing arrangements. |
| · | More effective utilization of Redwood’s existing tax assets and lower tax liabilities in the near term. The C-corporation Conversion will allow the Company to use net operating loss carryforwards (“NOLs”) from its REIT-qualified businesses to offset taxes on earnings from its tax-paying businesses, which represent the vast majority of total earnings, effectively lowering the tax liabilities, and related cash expense, of the Company’s mortgage banking businesses over a multi-year period. Because of the utility the tax assets will have in this new structure, the Company expects to recognize an initial benefit to book value in the fourth quarter of 2026 of approximately $0.73 to $0.77 per share (estimated benefit as of September 30, 2026). |
“Redwood has evolved into a premier mortgage credit platform, sourcing, aggregating and managing residential mortgage assets for a growing network of institutional capital partners,” said Christopher J. Abate, Chief Executive Officer of Redwood. “Our next chapter is about translating those competitive advantages into greater value for shareholders. With a new corporate structure and resilient core business, we are confident in our ability to lower our cost of capital, deepen access to accretive sources of financing, reduce leverage, compound earnings and book value, and create lasting value for shareholders.” Mr. Abate continued, “Our earnings announcement today noted that we have upsized our corporate secured financing facility and extended its maturity through March 2030, further strengthening our financing flexibility as we begin this new chapter.”
Exchange Offer Planned to Provide
Income-Oriented Common Stockholders
with a High Dividend Preferred Stock Investment Option
The Company plans to launch the Exchange Offer during the week of November 9, 2026. The Exchange Offer will provide common stockholders the opportunity to exchange some or all of the Company common stock they hold for shares of a new issue of 11.00% Series B Preferred Stock of the Company (the “Series B Preferred Stock”). The Company currently plans to exchange $50 million of common stock for shares of Series B Preferred Stock, and may increase the size of the Exchange Offer if it is meaningfully oversubscribed.
| · | The Exchange Offer is intended to provide common stockholders seeking a high level of continuing dividend income with an opportunity to exchange the shares of common stock they hold for shares of Series B Preferred Stock, which offer both dividend priority and seniority over common stock in Redwood's capital structure. |
| · | The Exchange Offer will be conducted through a modified Dutch auction, with the auction results determining the final exchange ratio of Series B Preferred Stock for Company common stock. We anticipate that exchanging common stockholders will receive Series B Preferred Stock with a face value greater than (i.e., a premium to) the value of the common stock exchanged. |
| · | The Series B Preferred Stock will have an 11% coupon rate, with the effective yield potentially enhanced by the final exchange ratio in the Exchange Offer. |
| · | The Company intends to apply to list the Series B Preferred Stock on the New York Stock Exchange. |
Mr. Abate continued, “We know that some of our shareholders value the dividend that Redwood pays and we wanted to ensure they have an option to remain invested in the Company through our C-corporation transition process and continue to receive a high dividend. The Exchange Offer is designed to provide exchanging shareholders a preferred security with an effective yield of at least 11%, while allowing other common shareholders to remain fully invested in the growth of our platform and enterprise and benefit from the book value and earnings per share accretion that would result from this Exchange Offer.”
The Exchange Offer has not commenced. The final terms of the Exchange Offer will be announced at the formal launch of the Exchange Offer. This announcement is for informational purposes only and does not constitute an offer to buy, sell, or exchange securities or a solicitation of an offer to buy, sell or exchange securities. Any Exchange Offer will be made solely through definitive offering materials, which stockholders should carefully review when available.
MacKenzie will be the information agent for the Exchange Offer. For inquiries regarding the Exchange Offer, please call 800-322-2885 or email RWT-MPI@mackenziepartners.com.
Protecting the Value of Redwood's Tax Assets
As part of the C-corporation Conversion, today the Board unanimously adopted a Tax Benefits Preservation Rights Plan (the “Rights Plan”) to help protect the Company’s ability to use its NOLs and other tax assets under Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”).
Redwood estimates that it currently has approximately $304 million of U.S. federal NOLs available to offset future taxable income following the C-corporation Conversion. The Company’s ability to use these NOLs would be substantially limited if the Company experienced an “ownership change” within the meaning of Section 382 of the IRC. The Board adopted the Rights Plan to help ensure that the NOLs are not impaired by changes to the Company’s stockholder base.
Under the Rights Plan, the rights generally become exercisable only if a person or group (an “acquiring person”) acquires ownership of 4.9% or more of Company common stock and certain other Company securities (the “Specified Threshold”), subject to certain exceptions. In that situation, each holder of a right (other than the acquiring person, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, shares of Company common stock at a 50% discount. The Board, at its option, may exchange each right (other than rights owned by the acquiring person that have become void) in whole or in part, at an exchange ratio of one share of Company common stock per outstanding right, subject to adjustment.
If a person or group’s ownership equals or exceeds the Specified Threshold at the time of today’s announcement of the Rights Plan, then that person’s or group’s existing ownership will be grandfathered. Grandfathered stockholders that hold in excess of 5.0% are permitted to acquire up to an additional 0.5%. In addition to the Rights Plan, our charter prohibits any person or group from acquiring “beneficial ownership” of our “capital stock” (as those terms are defined in our charter) in excess of 9.8% of our outstanding capital stock, absent a written waiver from the Board.
In order to further help protect the Company’s tax assets in connection with the planned Exchange Offer, the Company intends to incorporate restrictions on the level of ownership of the Series B Preferred Stock issued in the Exchange Offer, which will be disclosed at the formal launch of the Exchange Offer.
Additional information regarding the Rights Plan is contained in a Current Report on Form 8-K filed by the Company today with the U.S. Securities and Exchange Commission (the “SEC”).
Positioning Redwood's Common Stock for a Broader Investor Base
As part of the C-corporation Conversion, the Board has also unanimously approved a one-for-five reverse stock split (the “Reverse Stock Split”) of the Company’s common stock, which is scheduled to be effective at market open on January 4, 2027. The Reverse Stock Split is being effected to enhance the marketability of the Company’s common stock, broaden the Company’s appeal to investors and better align its share structure with Redwood's evolving business model. Additional information about the Reverse Stock Split is contained in a Current Report on Form 8-K filed by the Company today with the SEC. The Company will also announce additional details about the Reverse Stock Split prior to its effective date.
* * *
The Company will provide additional detail on the C-corporation Conversion, the Rights Plan, and the Reverse Stock Split in connection with its third quarter 2026 results, which are also being published today after the close of the New York Stock Exchange, and during its third quarter 2026 earnings results conference call at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time. Details for the earnings results conference call and webcast are available in the Investor Relations section of the Company’s website at www.redwoodtrust.com.
ABOUT REDWOOD TRUST
Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on several distinct areas of housing credit where we provide liquidity to growing segments of the U.S. housing market not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors, through our best-in-class securitization platforms, whole-loan distribution activities, joint ventures and our publicly traded shares. We operate through three core residential housing-focused operating platforms — Sequoia, Aspire, and CoreVest — alongside our complementary Redwood Investments portfolio which is primarily composed of assets we source through these platforms. Redwood Investments also includes RWT Horizons®, our unified technology platform spanning internal AI innovation and strategic investments across the ecosystem, which supports our efforts to develop an AI-first operating model that enables compounding operational leverage and scalable growth. This reflects how we manage and organize our business and may differ from the manner in which our reportable segments are presented for financial reporting purposes.
Our goal is to provide attractive returns to shareholders through earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-minded scale. Redwood Trust is internally managed and is currently structured as a real estate investment trust ("REIT") for tax purposes. The Company has announced a plan to transition to a C-corporation beginning with its 2027 tax year. For more information about Redwood, please visit our website at www.redwoodtrust.com or connect with us on LinkedIn.
Cautionary Statement; Forward-Looking Statements:
This press release and the related conference call contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding, the planned C-corporation Conversion, including its expected timing and effectiveness, and its anticipated benefits; the Company’s new quarterly dividend policy and its expected effective date, and the anticipated retention, use and reinvestment of earnings; the Company’s ability to utilize its NOLs and other tax assets, the estimated amount of such NOLs, expected reductions in taxes and the expected initial benefit to book value in the fourth quarter of 2026; the planned Exchange Offer, including its expected launch date, structure, terms, size, exchange-price range and price premium, and the terms of the Series B Preferred Stock; the Rights Plan and its ability to protect the Company’s tax assets; the expected timing, terms and effects of the Reverse Stock Split; and the Company’s business strategy, objectives and future financial performance. Forward-looking statements involve numerous risks and uncertainties. Redwood's actual results may differ from Redwood's beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “could,” “would,” “may,” “expect,” “believe,” “intend,” “seek,” “plan” and similar expressions or their negative forms, or by references to strategy, plans, opportunities, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2025 under the caption “Risk Factors”. Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in reports we file with the SEC, including reports on Forms 10-K, 10-Q and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Risks and Disclosures Related to the Planned Exchange Offer:
Additional terms and conditions of the planned Exchange Offer will be set forth in the Company’s definitive offering materials, which will be filed with the SEC and distributed to the Company’s common stockholders. If the number of shares of common stock tendered in the planned Exchange Offer exceeds the maximum amount of the planned Exchange Offer, the Company will exchange shares from tendering stockholders on a pro rata basis. Accordingly, there is no assurance that the Company will exchange all shares of a stockholder’s common stock tendered in the Exchange Offer. The Company may determine not to accept shares of common stock tendered in the Exchange Offer under various circumstances, as will be set forth in the definitive offering materials for the planned Exchange Offer. Further information about the planned Exchange Offer will be announced in future press releases and the definitive offering materials for the planned Exchange Offer.
The Company has not commenced the Exchange Offer described in this press release. This press release is not a recommendation, an offer to buy, sell, or exchange or a solicitation of an offer to buy, sell, or exchange any securities of the Company and the above statements are not intended to constitute an offer to participate in any exchange offer. The solicitation and the offer to exchange shares of common stock of the Company will be made pursuant to an offer to exchange and related materials that the Company intends to file with the SEC. At the time the planned Exchange Offer is commenced, the Company intends to file a Tender Offer Statement on Schedule TO containing an offer to exchange, forms of letters of transmittal and other documents relating to the planned Exchange Offer. The Company intends to distribute these documents to the common stockholders of the Company. These documents will contain important information about the planned Exchange Offer and stockholders of the Company are urged to read them carefully when they become available. Investors may obtain free copies of the Tender Offer Statement and other documents (when they become available) filed with the SEC at the SEC’s website at www.sec.gov or on the Company’s website at www.redwoodtrust.com.
The Company planning to rely on Section 3(a)(9) of the Securities Act of 1933 (the “Securities Act”) to exempt the planned Exchange Offer from the registration requirements of the Securities Act. Section 3(a)(9) provides that the registration requirements of the Securities Act will not apply to “any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.” The Company has no current or planned contract, arrangement or understanding relating to, and will not, directly or indirectly, pay any commission or other remuneration to any broker, dealer, salesperson, agent or any other person for soliciting tenders in the planned Exchange Offer.
CONTACT
Investor Relations
Phone: 866-269-4976
Email: investorrelations@redwoodtrust.com
Filing Exhibits & Attachments
10 documentsPress Releases
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- EX-1.1 EXHIBIT 1.1 69.0 KB
- EX-3.1 EXHIBIT 3.1 46.1 KB
- EX-3.2 EXHIBIT 3.2 153.0 KB
- EX-4.1 EXHIBIT 4.1 428.2 KB
- EX-4.2 EXHIBIT 4.2 72.8 KB
- EX-101 XBRL TAXONOMY EXTENSION SCHEMA 4.3 KB
- EX-101 XBRL TAXONOMY EXTENSION DEFINITION LINKBASE 28.2 KB
- EX-101 XBRL TAXONOMY EXTENSION LABEL LINKBASE 40.7 KB
- EX-101 XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE 26.8 KB