Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 106

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 106
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It is not possible, however,
to state whether in all circumstances we would be entitled to the benefit of these relief provisions. For example, if we fail to satisfy
the gross income tests because nonqualifying income that we intentionally accrue or receive exceeds the limits on nonqualifying income,
the IRS could conclude that our failure to satisfy the tests was not due to reasonable cause. If these relief provisions do not apply
to a particular set of circumstances, we will not qualify as a REIT. See “Material U.S. Federal Income Tax Considerations—Taxation
of the Company—Failure to Qualify” below. As discussed above in “Material U.S. Federal Income Tax Considerations—Taxation
of the Company—General,” even if these relief provisions apply, and we retain our qualification as a REIT, a tax would be
imposed with respect to our nonqualifying income. We may not always be able to comply with the gross income tests for REIT qualification
despite periodic monitoring of our income.

Asset Tests

At the close of each calendar
quarter of our taxable year, we must also satisfy certain tests relating to the nature and diversification of our assets. First, at least
75% of the value of our total assets must be represented by real estate assets, cash, cash items and U.S. government securities. For
purposes of this test, the term “real estate assets” generally means real property (including interests in real property
and interests in mortgages on real property or on both real property and, to a limited extent, personal property), shares (or transferable
certificates of beneficial interest) in other REITs, any stock or debt instrument attributable to the investment of the proceeds of a
stock offering or a public offering of debt with a term of at least five years (but only for the one-year period beginning on the date
the REIT receives such proceeds), debt instruments of publicly offered REITs and personal property leased in connection with a lease
of real property for which the rent attributable to personal property is not greater than 15% of the total rent received under the lease.
Regular or residual interests in REMICs are generally treated as a real estate asset. If, however, less than 95% of the assets of a REMIC
consists of real estate assets (determined as if we held such assets), we will be treated as owning our proportionate share of the assets
of the REMIC. In the case of any