Company: RWT-PA
Filing Date: 2025-03-03
Form Type: S-3ASR
Source: 0001104659-25-019828
Chunk: 57

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: S-3ASR
Chunk 57
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,  
 then the portion of the rent attributable to personal property will not qualify as “rents   
 from real property.” To the extent that rent attributable to personal property leased       
 in connection with a lease of real property exceeds 15% of the total rent received under    
 the lease, we may transfer a portion of such personal property to a TRS; and                |

| · | We                                                                                             
 generally may not operate or manage the property or furnish or render services to our tenants, 
 subject to a 1% de minimis exception and except as provided below. We may, however,            
 perform services that are “usually or customarily rendered” in connection with                 
 the rental of space for occupancy only and are not otherwise considered “rendered to           
 the occupant” of the property. Examples of these services include the provision of             
 light, heat, or other utilities, trash removal and general maintenance of common areas. In     
 addition, we may employ an independent contractor from whom we derive no revenue to provide    
 customary services to our tenants, or a TRS (which may be wholly or partially owned by us)     
 to provide both customary and non-customary services to our tenants, without causing the       
 rent we receive from those tenants to fail to qualify as “rents from real property.”           |

We intend to structure any
leases so that the rent payable thereunder will qualify as “rents from real property,” but there can be no assurance we will
be successful in this regard.

Phantom Income

Due to the nature of the
assets in which we may invest, from time to time we may be required to recognize taxable income from those assets in advance of our receipt
of cash flow on or proceeds from disposition of such assets, and may be required to report taxable income in early periods that exceeds
the economic income ultimately realized on such assets.

If we were to acquire debt
instruments in the secondary market for less than their face amount, the amount of such discount generally would be treated as “market
discount” for U.S. federal income tax purposes. Accrued market discount is reported as income when, and to the extent that,
any payment of principal of the debt instrument is made, unless we elect to include accrued market discount in income as it accrues.
Principal payments on certain loans are made monthly, and consequently accrued market discount may have to be included in income each
month as if the debt instrument were assured of ultimately being collected in full. If we collect less on the debt instrument than our