Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 105

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 105
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 qualification
despite periodic monitoring of our income.

Asset Tests

At the close of each calendar
quarter of our taxable year, we must also satisfy certain tests relating to the nature and diversification of our assets. First, at least
75% of the value of our total assets must be represented by real estate assets, cash, cash items and U.S. government securities. For
purposes of this test, the term “real estate assets” generally means real property (including interests in real property
and interests in mortgages on real property or on both real property and, to a limited extent, personal property), shares (or transferable
certificates of beneficial interest) in other REITs, any stock or debt instrument attributable to the investment of the proceeds of a
stock offering or a public offering of debt with a term of at least five years (but only for the one-year period beginning on the date
the REIT receives such proceeds), debt instruments of publicly offered REITs and personal property leased in connection with a lease
of real property for which the rent attributable to personal property is not greater than 15% of the total rent received under the lease.
Regular or residual interests in REMICs are generally treated as a real estate asset. If, however, less than 95% of the assets of a REMIC
consists of real estate assets (determined as if we held such assets), we will be treated as owning our proportionate share of the assets
of the REMIC. In the case of any interests in grantor trusts, we would be treated as owning an undivided beneficial interest in the mortgage
loans held by the grantor trust.

Second, not more than 25%
of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable
in the 75% asset test.

Third, of the investments
included in the 25% asset class, and except for certain investments in other REITs, our qualified REIT subsidiaries and TRSs, the value
of any one issuer’s securities may not exceed 5% of the value of our total assets, and we may not own more than 10% of the total
vote or value of the outstanding securities of any one issuer. Certain types of securities we may own are disregarded as securities solely
for purposes of the 10% value test, including, but not limited to, securities satisfying the “straight debt” safe harbor,