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Company Description

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One Belvedere Place

Suite 300

Mill Valley, CA 94941

United States

Phone: 415-389-7373

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Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage- and other real estate-related assets and engaging in mortgage banking activities. Segments During 2015, the company operated its business in three segments: Residential Mortgage Banking, Residential Investments, and Commercial Mortgage Banking and Investments. Residential Mortgage Banking This segment primarily consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to the company’s investment portfolio. The company typically acquires prime, jumbo mortgages and the related mortgage servicing rights on a flow basis from its network of loan sellers and distributes those loans through its Sequoia private-label securitization program or to institutions that acquire pools of whole loans. The company occasionally supplements its flow purchases with bulk loan acquisitions. This segment also includes various derivative financial instruments and interest only securities retained from its Sequoia securitizations that the company utilizes to manage certain risks associated with residential loans that it acquires. During 2015, the company also acquired conforming loans (defined as loans eligible for sale to Fannie Mae and Freddie Mac (the ‘Agencies’)) and the related servicing rights on a flow basis from the company’s seller network. Conforming loans that the company acquired are generally sold to the Agencies. This segment’s main source of revenue is income from mortgage banking activities, which include valuation increases (or gains) on the sale or securitization of loans, and from hedges used to manage risks associated with these activities. Additionally, this segment might generate interest income on loans held pending securitization or sale. Residential Investments This segment includes a portfolio of investments in residential mortgage-backed securities retained from the company’s Sequoia securitizations, as well as residential mortgage-backed securities issued by third parties. In addition, this segment includes a subsidiary of the company that is a member of the Federal Home Loan Bank of Chicago (FHLBC) and that utilizes attractive long-term financing from the FHLBC to make long-term investments directly in residential mortgage loans. Additionally, this segment invests in mortgage servicing rights (MSRs) associated with residential loans that the company has sold or securitized, as well as MSRs that it purchased from third parties. This segment’s main sources of revenue are interest income from investment portfolio securities and residential loans held-for-investment, as well as MSR income. Additionally, this segment might realize gains upon the sale of securities. Commercial Mortgage Banking and Investments This segment consists primarily of a mortgage loan conduit that originated senior commercial loans for subsequent sale to third-party commercial mortgage-backed securities sponsors or other investors. In addition to senior loans, during 2015, the company offered complementary forms of commercial real estate financing directly to borrowers that included mezzanine loans, subordinate mortgage loans, and other financing solutions. The company typically has held the mezzanine and other subordinate loans that the company originated in its commercial investment portfolio. During the first quarter of 2016, as part of the company’s ongoing evaluation of the efficiency and profitability of its businesses, the company announced plans to reposition its commercial business to focus solely on investing activities and discontinue commercial loan originations. During 2015, this segment’s main sources of revenue were mortgage banking income, which included valuation increases (or gains) on the sale of senior commercial loans and associated hedges, and net interest income from mezzanine or subordinate loans held in the company’s investment portfolio. Tax Status The company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended. As a result, the company is not subject to Federal or State income taxation at the corporate level to the extent it distributes annually approximately 90% of its REIT taxable income to its shareholders and satisfies certain other requirements. History Redwood Trust, Inc. was founded in 1994. The company was incorporated in the state of Maryland in 1994.

 

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Valuation R2V Industry Range
Price/Earnings 11.1x
Price/Sales 4.8x
Price/Book 1.0x
Price/Cash Flow 9.7x
TEV/Sales NM Not Meaningful
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