Redwood Trust, Inc. (NYSE: RWT) priced an upsized offering of $185 million in 7.00% convertible senior notes due 2030. The conversion price for the notes is set at approximately $4.90 per share. This private offering targets qualified institutional buyers under Rule 144A of the Securities Act of 1933.

The initial size was increased from the previously announced $150 million. The company granted initial purchasers an option to buy up to an additional $20 million in principal amount of notes. Settlement for the option exercise would occur within 13 days from the issue date. The offering is expected to close on September 15, 2026.

Use of Proceeds

Redwood intends to allocate net proceeds from the offering across three primary areas:

• Repurchase approximately $123.79 million aggregate principal amount of its 7.75% convertible senior notes due 2027 concurrently with pricing via privately negotiated transactions.
• Repurchase approximately $20 million in common stock (5,509,641 shares) concurrently with pricing through similar private transactions.
• Fund general corporate purposes, including operating businesses and investment activities.

The company stated that remaining proceeds will support its Sequoia, Aspire, and CoreVest mortgage banking platforms. Funds may also be used to acquire assets for its Redwood Investments portfolio or pursue strategic acquisitions.

Conversion Terms

The initial conversion rate is 204.0608 shares of common stock per $1,000 principal amount of Notes. This is equivalent to a conversion price of approximately $4.90 per share, representing a premium of approximately 35.0% over the closing price of Redwood’s common stock on September 10, 2026. Holders may convert their notes at any time after June 17, 2030. Before that date, conversion rights are limited to specific events.

Market Impact Considerations

Holders of the 2027 Notes repurchased in these concurrent transactions may purchase Redwood common stock in the open market to unwind hedge positions. The company noted that such activities could affect the trading price of its common stock and the initial conversion price of the new notes.

Concurrent repurchases of common stock may result in higher trading prices than would otherwise occur. This dynamic could lead to a higher initial conversion price for the offered notes.

What the Numbers Show

The capital structure adjustment involves simultaneous issuance and repurchase activities. By issuing $185 million in long-term convertible debt (due 2030) while repurchasing shorter-term 2027 Notes and $20 million in equity, Redwood is extending its liability maturity profile while reducing near-term equity count. The coupon rate of 7.00% on the new notes replaces the higher 7.75% cost on the maturing 2027 debt, suggesting a reduction in interest expense burden despite the larger principal amount issued.

Redwood Trust, Inc. (NYSE: RWT) declared a third quarter 2026 common stock dividend of $0.18 per share, maintaining the rate from the previous quarter. The payout represents the company’s 109th consecutive quarterly dividend.

The Board of Directors also authorized a Series A preferred stock dividend of $0.625 per share for the third quarter of 2026.

Dividend Details

The common stock dividend is payable on September 30, 2026, to stockholders of record on September 23, 2026. The amount remains unchanged from the second quarter of 2026.

The Series A dividend applies to the 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock. Payments for this class are scheduled for October 15, 2026, with a record date of October 1, 2026.

What the Numbers Show

The maintenance of the $0.18 common dividend rate signals continuity in capital return policy, extending the streak of consecutive payouts to 109 quarters without interruption or reduction.