Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 95

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 95
---
 our capital
stock.

If a subsidiary partnership
of ours that we do not wholly own, directly or through one or more disregarded entities, were a TMP, the foregoing rules would not
apply. Rather, the partnership that is a TMP would be treated as a corporation for U.S. federal income tax purposes, and potentially
would be subject to U.S. federal corporate income tax or withholding tax. In addition, this characterization would alter our income and
asset test calculations, and could adversely affect our compliance with those requirements. We intend to monitor the structure of any
TMPs in which we will have an interest to ensure that they will not adversely affect our qualification as a REIT.

Income Tests

We must satisfy two gross
income requirements annually to maintain our qualification as a REIT. First, in each taxable year we must derive directly or indirectly
at least 75% of our gross income (excluding gross income from prohibited transactions, certain hedging transactions, and certain foreign
currency gains) from investments relating to real property or mortgages on real property, including “rents from real property,”
dividends from other REITs and, in certain circumstances, interest, or certain types of temporary investments. Second, in each taxable
year we must derive at least 95% of our gross income (excluding gross income from prohibited transactions, certain hedging transactions,
and certain foreign currency gains) from the real property investments described above or dividends, interest and gain from the sale
or disposition of stock or securities, or from any combination of the foregoing.

Interest Income

Interest income constitutes
qualifying mortgage interest for purposes of the 75% gross income test to the extent that the obligation is secured by a mortgage on
real property or on interests in real property and, if an obligation is secured by a mortgage on both real property and personal property,
the fair market value of such personal property does not exceed 15% of the total fair market value of all such property. In the event
that we invest in a mortgage loan that is secured by both real property and personal property, we may be required to apportion our interest
on the loan between interest on an obligation that is secured by real property (or by an interest in real property) and interest on an
obligation that is not so secured. Even if a loan is not secured by real property or is undersecured, the income that it generates may
nonetheless qualify for purposes of the 95% gross income test.

To the extent that we