Company: RWT-PA
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000930236-25-000037
Chunk: 105

Company: REDWOOD TRUST INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 1
Chunk 105
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12. Strategic Investments - (continued)

In connection with one of these joint ventures, we entered into a promissory note receivable with a taxable subsidiary of the joint venture entity. The note provides for a total revolving credit facility of up to $150 million, with interest accruing at one-month SOFR plus a spread. Interest payments are due quarterly and may be paid in cash or capitalized as payment-in-kind ("PIK") interest. The note receivable matures on June 1, 2031 with two optional one-year extensions available at the joint venture's election, and can be prepaid at any time without penalty. At September 30, 2025, the outstanding balance on this note receivable was $7 million and is included in Other Investments in Table 12.1 above. For the three and nine-month periods ended September 30, 2025, we recognized $0.2 million and $0.2 million, respectively, in interest on this note.In the first quarter of 2025, we made a minority equity investment in a newly-formed mortgage loan origination company focused on originating construction loans for builders of single-family homes. These loans generally carry final maturity dates of 12-24 months and finance in a first lien position either (i) the acquisition and development of land by the homebuilder while it prepares the real estate for vertical construction, or (ii) the vertical construction of the homes themselves, primarily for sale to owner occupants. In connection with our investment, this mortgage loan origination company committed to sell loans it originates to Redwood and future capital partners. At September 30, 2025, the carrying value of our investment in this company was $3 million. We account for our investment under the equity method of accounting as we currently have a minority non-controlling interest equal to 35% in this company, which may subsequently go up or down depending upon the company's ability to meet pre-determined financial targets. We are deemed to be able to exert significant influence over the affairs of this company. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. As this company is continuing to ramp up operations, we did not recognize any net equity method earnings for both the three and nine months ended September 30, 2025. During the three and nine months ended September 30, 2025, we acquired $80 million and $105 million, respectively, of residential construction