Redwood Exits REIT Status, Plans 1-for-5 Reverse Split and $50M Preferred Exchange Offer
RWT is trading near its 52-week low of $2.875 (4.7% above the low).
Summary
Redwood will revoke its REIT election effective January 1, 2027, cut the common dividend to $0.02 a quarter, do a 1-for-5 reverse split on December 31, 2026, and offer up to $50 million of common stock for a new 11.00% Series B preferred. Management expects the tax asset recognition to add $0.73-$0.77 per share to Q4 book value.
Key Events · Financing and Capital Events · RWT
-
REIT Election to Be Revoked for 2027
Board unanimously approved converting to a taxable C-corporation effective January 1, 2027, with the IRS revocation filing expected on or prior to March 31, 2027. Redwood estimates roughly $304 million of federal NOLs will be available to offset future taxable income after the conversion.
-
Common Dividend Cut to $0.02 per Quarter
The quarterly common dividend policy is reset to $0.02 per share, expected to take effect with the Q4 2026 declaration in December 2026, so earnings can be retained and reinvested in the mortgage banking platforms.
-
One-for-Five Reverse Split Set for December 31
Every five shares convert into one at 5:00 p.m. Eastern on December 31, 2026, with split-adjusted trading starting January 4, 2027 under the same RWT symbol and a new CUSIP. Ownership percentages are unchanged apart from fractional-share cash-outs.
-
$50M Preferred-for-Common Exchange Offer Planned
Redwood plans to launch a modified Dutch auction in the week of November 9, 2026, exchanging up to $50 million of common stock for a new 11.00% Series B Preferred, with the final exchange ratio set by the auction and expected to carry a face-value premium to the common exchanged.
Analysis · RWT · Real Estate & Construction
Redwood is dismantling the structure it has operated under for two decades. Converting to a C-corporation lets it keep earnings instead of distributing them, and lets roughly $304 million of net operating losses shield the mortgage banking earnings that were previously trapped in taxable subsidiaries. The trade-off is immediate for income holders: the quarterly common dividend drops to $0.02 per share, and the company is offering them an 11.00% Series B preferred in exchange for common. The one-for-five reverse split lifts the share price mechanically without changing anyone's ownership percentage. The rights plan and the Hildene trust preferred repurchase exist to protect the tax assets and clear a legacy REIT covenant. Management estimates the tax asset recognition alone adds $0.73 to $0.77 per share of book value in Q4 2026, which is large relative to a stock trading near $3.01.
How filings like this one have moved
In the 30 days to Nov 3, 2026, 50.3% of the 199 measured filings Wiseek scored 9 moved their stock by 5% or more by the next session's close. The median move was -0.29%. These are measured outcomes after filings of this importance, not a forecast for this one.
Measured one observation per ticker per day, after exclusions. Current figures: Filing Impact Tracker · open dataset
At the time of this filing, RWT was trading at $3.01 on NYSE in the Real Estate & Construction sector, with a market capitalization of approximately $390.7M. The 52-week trading range was $2.88 to $6.97. This filing was assessed with neutral market sentiment and an importance score of 9 out of 10.