Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 109

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 109
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 be deemed to have met the 5% and 10% asset tests if the value of our nonqualifying assets (i) does not exceed
the lesser of (a) 1% of the total value of our assets at the end of the applicable quarter or (b) $10,000,000, and (ii) we
dispose of the nonqualifying assets or otherwise satisfy such tests within (a) six months after the last day of the quarter in which
the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury Regulations to be issued.
For violations of any of the asset tests due to reasonable cause and not due to willful neglect and that are, in the case of the 5% and
10% asset tests, in excess of the de minimis exception described above, we may avoid disqualification as a REIT after the 30-day
cure period by taking steps including (1) the disposition of sufficient nonqualifying assets, or the taking of other actions, which
allow us to meet the asset tests within (a) six months after the last day of the quarter in which the failure to satisfy the asset
tests is discovered or (b) the period of time prescribed by Treasury Regulations to be issued, (2) paying a tax equal to the
greater of (a) $50,000 or (b) the U.S. federal corporate income tax rate the net income generated by the
nonqualifying assets, and (3) disclosing certain information to the IRS.

Although we believe we have
satisfied the asset tests described above and plan to take steps to ensure that we satisfy such tests for any quarter with respect to
which retesting is to occur, there can be no assurance that we will always be successful, or will not require a reduction in our overall
interest in an issuer (including in a TRS). If we fail to cure any noncompliance with the asset tests in a timely manner, and the relief
provisions described above are not available, we would cease to qualify as a REIT.

Annual Distribution Requirements

To maintain our qualification
as a REIT, we are required to distribute dividends, other than capital gain dividends, to our stockholders each year in an amount at
least equal to the sum of:

| · | 90% of our               
 REIT taxable income; and |

| · | 90% of our                                                     
 after-tax net income, if any, from foreclosure