Redwood Trust, Inc. (NYSE: RWT), an investor in and funding source for residential financing, on Jan. 29 announced participation in the purchase of up to $1 billion in whole loans on multifamily properties.
This comes days after the Mill Valley-based real estate investment trust said it acquired the rest of a Southern California lender for small-scale rental-property investors.
"Expanding Redwood's reach into the multifamily whole loan space is another example of our ability to identify and execute on innovative ways to scale our business for profitable growth," said Christopher J. Abate, CEO, in a statement. "This investment strengthens our relationship with Freddie Mac and furthers our efforts to invest our shareholder's capital in areas of the housing market where it is most valued. We look forward to deploying the remainder of the capital we have committed to the fund."
Earlier this month, Redwood Trust invested in a limited partnership created to acquire floating rate, light-renovation multifamily loans from Freddie Mac. Out of as much as $78 million committed to the partnership, Redwood Trust said it has funded about $20 million to date.
Freddie Mac is providing a debt facility to finance loans purchased by the partnership. After the partnership's acquisitions have reached a specific threshold, the partnership and Freddie Mac may agree to include the related loans in a Freddie Mac-sponsored securitization, according to Redwood Trust. The limited partners may acquire the subordinate securities issued in any such securitization.
On Jan. 23, Redwood Trust announced it was acquiring the other 80 percent of 5 Arches LLC, a 6-year-old funder of fix-and-flip investments as well as long-term or bridge financing for single-family or under-100-unit properties.
After the stock markets closed Jan. 29, Redwood Trust announced plans for an underwritten offering of 10 million shares of common stock. Terms of the offering weren't disclosed at this point, but the company said it plans to use proceeds for purposes such as the 5 Arches acquisition, Freddie Mac multifamily-loan partnership and other investments in loans.
The price of Redwood Trust stock was $16.11 a share at the close of trading Jan. 29, down 3 cents, but the price slid in after-hours trading by nearly 2.5 percent, to $15.71.