Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 112

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 112
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 entities and joint venture co-investments, and we are deemed to be able to exert significant influence over the affairs of the joint venture. 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. For the three and six months ended June 30, 2025 we recognized net equity method earnings of $1 million and $2 million, respectively, through Other income, net in our Consolidated statements of income. In the second quarter of 2025, Redwood and this joint venture entity 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 June 30, 2025, the outstanding balance on this note receivable was $8 million and is included in Other Investments in Table 12.1 above. For the three and six-month periods ended June 30, 2025, we recognized $0.1 million 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. In connection with our investment, this mortgage loan origination company committed to sell loans it originates to Redwood and future capital partners. At June 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, and 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 continues to ramp up operations, we did not recognize any net equity method earnings for both the three and six months ended June 30, 2025. During the three months ended June 30, 2025, we acquired $25 million of residential construction loans from this company