Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 108

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 108
---
 limitation with
respect to our ownership of the securities of such companies. We believe that the aggregate value of our TRSs has not exceeded, and in
the future will not exceed, 20% (25% for taxable years beginning after July 30, 2008 and before January 1, 2018) of the aggregate
value of our gross assets. We generally do not obtain independent appraisals to support these conclusions. In addition, there can be
no assurance that the IRS will not disagree with our determinations of value.

Fifth, not more than 25%
of the value of our total assets may be represented by debt instruments of publicly offered REITs to the extent those debt instruments
would not be real estate assets but for the inclusion of debt instruments of publicly offered REITs in the meaning of real estate assets,
as described above (e.g., a debt instrument issued by a publicly offered REIT that is not secured by a mortgage on real property).

<div align='center'>37</div>

We believe that the assets
comprising our mortgage-related investments and securities that we own generally are qualifying assets for purposes of the 75% asset
test, and that our ownership of TRSs and other assets have been structured in a manner that will comply with the foregoing REIT asset
requirements, and we monitor compliance on an ongoing basis. There can be no assurance, however, that we will always be successful in
this effort. In this regard, to determine compliance with these requirements, we need to estimate the value of our assets, and we do
not expect to obtain independent appraisals to support our conclusions as to the total value of our assets or the value of any particular
security or other asset. Moreover, values of some assets, including our interests in our TRSs, may not be susceptible to a precise determination
and are subject to change in the future. Although we will continue to be prudent in making these estimates, there can be no assurance
that the IRS will not disagree with these determinations and assert that a different value is applicable, in which case we might not
satisfy the REIT asset tests, and could fail to qualify as a REIT.

In the event that we invest
in a mortgage loan that is not fully secured by real property, Revenue Procedure 2014-51 provides a safe harbor under which the IRS has
stated that it will not challenge a REIT’s treatment of a loan as being, in part,