Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 92

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 92
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 REIT that
is a partner in a partnership (for purposes of this discussion, references to “partnership” include a limited liability company
treated as a partnership for U.S. federal income tax purposes, and references to “partner” include a member in such a limited
liability company), Treasury Regulations provide that the REIT will be deemed to own its proportionate share of the assets of the partnership
based on its interest in partnership capital, subject to special rules relating to the 10% asset test described below. Also, the
REIT will be deemed to be entitled to its proportionate share of the income of that entity. The assets and gross income of the partnership
retain the same character in the hands of the REIT for purposes of Section 856 of the Code, including satisfying the gross income
tests and the asset tests. Thus, our pro rata share of the assets and items of income of any partnership, including such partnership’s
share of these items of any partnership or disregarded entity for U.S. federal income tax purposes in which it owns an interest, would
be treated as our assets and items of income for purposes of applying the requirements described in this discussion, including the gross
income and asset tests described below. For purposes of the REIT qualification tests, the treatment of our ownership of partnerships
or limited liability companies that are, in each case, treated as disregarded entities for U.S. federal income tax purposes is generally
the same as described below with respect to qualified REIT subsidiaries.

We generally have control
of our subsidiary partnerships and intend to operate them in a manner consistent with the requirements for our qualification as a REIT.
If we become a limited partner or non-managing member in any partnership and such entity takes or expects to take actions that could
jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it
is possible that a partnership could take an action which could cause us to fail a gross income or asset test, and that we would not
become aware of such action in time to dispose of our interest in the partnership or take other corrective action on a timely basis.
In such a case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

From time to time, we may
own wholly owned subsidiaries that are treated as “qualified REIT subsidiaries” under the Code. A corporation (or other entity