Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 111

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 111
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. This is so even though these
distributions relate to the prior year for purposes of the 90% distribution requirement. In order to be taken into account for purposes
of our distribution requirement, except as provided below, the amount distributed must not be preferential — i.e., every stockholder
of the class of stock to which a distribution is made must be treated the same as every other stockholder of that class, and no class
of stock may be treated other than according to its dividend rights as a class. This preferential dividend limitation will not apply
to distributions made by us, provided we qualify as a “publicly offered REIT.” We believe that we are, and expect we will
continue to be, a “publicly offered REIT.” However, Subsidiary REITs we may own from time to time may not be publicly offered
REITs. To the extent that we do not distribute all of our net capital gain, or distribute at least 90%, but less than 100%, of our REIT
taxable income, as adjusted, we will be required to pay regular U.S. federal corporate income tax on the undistributed amount.

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We believe that we have made,
and we intend to continue to make, timely distributions sufficient to satisfy these annual distribution requirements and to minimize
our corporate tax obligations. However, from time to time, we may not have sufficient cash or other liquid assets to meet these distribution
requirements due to timing differences between the actual receipt of income and actual payment of deductible expenses, and the inclusion
of income and deduction of expenses in determining our taxable income. In addition, we may decide to retain our cash, rather than distribute
it, in order to repay debt or for other reasons. If these timing differences occur, we may borrow funds to pay dividends or pay dividends
in the form of taxable stock distributions in order to meet the distribution requirements, while preserving our cash. See “Material
U.S. Federal Income Tax Considerations—Taxation of the Company—Income Tests—Phantom Income.”

Under certain circumstances,
we may be able to rectify an inadvertent failure to meet the 90% distribution requirement for a year by paying “deficiency dividends”
to our stockholders in a later year, which may be included in our deduction for dividends paid for the earlier year. In that case, we
may be able to avoid being taxed on amounts distributed as deficiency dividends, subject to the 4