Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 353

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 353
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 loans and REO to decline over time as we proactively reduce long-term exposure to the Legacy bridge loan portfolio.

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We finance our legacy unsecuritized bridge and term loan portfolios with a combination of recourse and non-recourse, non-marginable warehouse facilities, and a portion of a secured, revolving financing facility. At June 30, 2025, we had $594 million of debt incurred through warehouse facilities, which was secured by unsecuritized residential investor bridge and term loans with a fair value of $879 million. At June 30, 2025, unsecuritized bridge and term loans with a fair value of $511 million were financed with $335 million of non-marginable, recourse warehouse facilities. At June 30, 2025, unsecuritized bridge and term loans with a fair value of $367 million were financed with $262 million of non-marginable, non-recourse warehouse facilities. Additionally, at June 30, 2025, our Legacy bridge loans were partially financed by secured, revolving financing facility borrowings.

Income Taxes

REIT Status and Dividend Characterization

While the exact amount is uncertain at this time, we currently expect a portion of our 2025 common stock dividend distributions to be taxable as ordinary income for federal income tax purposes. Any remaining amount is currently expected to be characterized as a return of capital, which in general is nontaxable (provided it does not exceed a shareholder's tax basis in Redwood shares) and reduces a shareholder's basis in Redwood shares (but not below zero). To the extent such distributions exceed a shareholder's basis in Redwood shares, such excess amount would be taxable as capital gains. We currently expect all of our 2025 preferred stock dividend distributions to be taxable as ordinary income for federal income tax purposes. Under the federal income tax rules applicable to REITs, none of Redwood’s 2025 dividend distributions are currently expected to be characterized as long-term capital gain dividends. The income or loss generated at our TRS will not directly affect the tax characterization of our 2025 dividends; however, any dividends paid from our TRS to our REIT would allow a portion of our REIT’s dividends to be classified as qualified dividends.

Tax Provision under GAAP

For the three and six months ended June 30, 2025, we recorded tax provisions of $5 million and $11 million, respectively. For both the three and six months ended June 30, 2024,