Redwood Trust Announces Dividend Distribution Tax Information for 2022

MILL VALLEY, Calif.–(COMMERCIAL THREAD)–Redwood Trust, Inc. (NYSE: RWT, “Redwood” or the “Company”), a leader in expanding access to housing for homebuyers and renters, today announced tax information regarding its 2022 dividend distribution.

Shareholders should check the tax returns they receive from their brokerage firms to confirm that the information about Redwood’s dividend distributions reported in those returns conforms to the information reported here. Set forth in this press release are Redwood’s expectations regarding the treatment of the Company’s 2022 dividend distributions for federal income tax purposes. Shareholders should consult their tax advisors to determine the amount of tax that should be paid on Redwood dividend distributions for federal, state and other income tax purposes.

All common stock dividend distributions paid during 2022 are reported on the 2022 federal shareholder income tax returns, including the four quarterly regular dividend distributions of $0.23 per share for the first, second, third and fourth quarters. Therefore, for 2022, Redwood shareholders who held shares for the entire period would be required to report a total of $0.92 per share of common stock dividend distributions for federal income tax purposes.

Under federal income tax rules applicable to real estate investment trusts (“REITs”), Redwood’s 2022 dividend distributions should be characterized for income tax purposes as ordinary income of 58% and qualified dividends by 42%. None of Redwood’s 2022 dividend distributions should be characterized for federal income tax purposes as a return of capital or long-term capital gains dividends.

Due to Redwood’s classification as a REIT, the portion of the 2022 dividend distributions that can be characterized as qualified dividends is limited to Redwood’s qualifying dividend income for the year. The amount defined as ordinary income under applicable federal income tax rules is generally taxed at the full ordinary income tax rates.

Individual taxpayers can generally claim a deduction from taxable income of 20% of their ordinary REIT dividends. This deduction does not apply to REIT dividends classified as a return on capital, qualified dividends, or long-term capital gains dividends.

For shareholders who are corporations, Redwood’s dividend distributions are generally not eligible for the deduction of corporate dividends received or the deduction of ordinary REIT dividends of 20%.

The following table provides more detailed information on the expected federal income tax characterization for each of Redwood’s common stock dividend distributions that were paid for 2022.

No portion of Redwood’s 2022 dividend distributions is expected to consist of taxable income from unrelated businesses (“UBTI”), which is subject to specialized tax reporting and other rules applicable to certain tax-exempt investors.

If you have any questions, consult your tax advisor for further guidance.

About Redwood Trust

Redwood Trust, Inc. (NYSE: RWT) is a specialty finance firm focused on several distinct areas of real estate lending. Our operating platforms are uniquely positioned in the real estate financing value chain, providing liquidity to growing segments of the US housing market not well served by government programs. We provide tailored real estate credit investments to a diverse mix of investors, through our best-in-class securitization platforms; full loan distribution business; and our publicly traded shares. Our established investment portfolio has evolved to incorporate a diverse mix of residential, commercial and multi-family investments. Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-oriented scalability. Since going public in 1994, we have run our business through several cycles, built a track record of innovation and a first-rate reputation for service and a common sense approach to credit investing. Redwood Trust is internally managed and structured as a real estate investment trust (“REIT”) for tax purposes. For more information about Redwood Trust, visit the Redwood website at www.redwoodtrust.com or connect with us on LinkedIn.

Forward-Looking Statements: This press release contains forward-looking statements pursuant to the safe haven provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to Redwood’s expectations regarding the treatment of our 2022 dividend distributions for federal income tax purposes. . Forward-looking statements involve many risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates and projections and, accordingly, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate”, “estimate”, “will”, “should”, “expect”, “believe”, “intend”, “seek”, “plan” and similar expressions or their negative forms, or with references to strategy, plans or intentions. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, those described in our annual report on Form 10-K for the year ended December 31, 2021 under “Risk Factors.” Other risks, uncertainties and factors that could cause actual results to differ materially from those anticipated may be described from time to time in reports we file with the Securities and Exchange Commission, including reports on Forms 10-Q and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.