Long-Term Debt

12 Months Ended

Dec. 31, 2022

The table below summarizes our long-term debt, including the facilities that are available to us, the outstanding balances, the weighted average interest rate, and the maturity information at December 31, 2022 and 2021.

Table 16.1 – Long-Term Debt


	December 31, 2022
(Dollars in Thousands)	Borrowings		Unamortized Deferred Issuance Costs / Discount		Net Carrying Value		Limit		Weighted Average Interest Rate (1)		Final Maturity
Facilities
Recourse Subordinate Securities Financing
Facility A	$	130,408	$	—	$	130,408	N/A		5.71	%	9/2024
Facility B	101,706		(50)		101,656		N/A		4.21	%	2/2025
Facility C	68,995		(125)		68,870		N/A		4.75	%	6/2026
Non-Recourse BPL Financing
Facility D	404,622		(667)		403,955		$	750,000	SOFR + 2.87%		N/A
Facility E	308,933		(838)		308,095		335,000		SOFR + 3.25%		12/2025
Recourse BPL Financing
Facility F	64,689		(473)		64,216		500,000		SOFR + 2.25%-2.50%		9/2024
Total Long-Term Debt Facilities	1,079,353		(2,153)		1,077,200
Convertible notes
5.625% convertible senior notes	150,200		(1,282)		148,918		N/A		5.625	%	7/2024
5.75% exchangeable senior notes	162,092		(2,410)		159,682		N/A		5.75	%	10/2025
7.75% convertible senior notes	215,000		(6,142)		208,858		N/A		7.75	%	6/2027
Trust preferred securities and subordinated notes	139,500		(733)		138,767		N/A		L + 2.25%		7/2037
Total Long-Term Debt	$	1,746,145	$	(12,720)	$	1,733,425

Table 16.1 – Long-Term Debt (continued)


	December 31, 2021
(Dollars in Thousands)	Borrowings		Unamortized Deferred Issuance Costs / Discount		Net Carrying Value		Limit	Weighted Average Interest Rate (1)		Final Maturity
Facilities
Recourse Subordinate Securities Financing
Facility A	$	144,385	$	(313)	$	144,072	N/A	4.21	%	9/2024
Facility B	102,351		(353)		101,998		N/A	4.21	%	2/2025
Facility C	91,707		(376)		91,331		N/A	4.75	%	6/2026
Non-Recourse BPL Financing
Facility D	307,215		(507)		306,708		400,000	L + 2.75%		N/A
Recourse BPL Financing
Facility G	234,349		(123)		234,226		450,000	L + 2.21%		9/2023
Facility H	110,148		—		110,148		450,000	L + 3.35%		6/2023
Total Long-Term Debt Facilities	990,155		(1,672)		988,483
Convertible notes
4.75% convertible senior notes	198,629		(1,836)		196,793		N/A	4.75	%	8/2023
5.625% convertible senior notes	150,200		(2,072)		148,128		N/A	5.625	%	7/2024
5.75% exchangeable senior notes	172,092		(3,384)		168,708		N/A	5.75	%	10/2025
Trust preferred securities and subordinated notes	139,500		(779)		138,721		N/A	L + 2.25%		7/2037
Total Long-Term Debt	$	1,650,576	$	(9,743)	$	1,640,833

(1) Variable rate borrowings are based on 1- or 3-month LIBOR ("L" in the table above) or SOFR plus an applicable spread.

The following table below presents the value of loans, securities, and other assets pledged as collateral under our long-term debt at December 31, 2022 and 2021.

Table 16.2 – Collateral for Long-Term Debt


(In Thousands)	December 31, 2022		December 31, 2021
Collateral Type
BPL bridge loans	$	897,782	$	554,597
BPL term loans	66,567		244,703
Real estate securities
Sequoia securitizations (1)	178,439		247,227
CAFL securitizations (1)	237,068		260,405
Total Collateral for Long-Term Debt	$	1,379,856	$	1,306,932

(1)Represents securities we have retained from consolidated securitization entities. For GAAP purposes, we consolidate the loans and non-recourse ABS debt issued from these securitizations.

The following table summarizes the accrued interest payable on long-term debt at December 31, 2022 and 2021.

Table 16.3 – Accrued Interest Payable on Long-Term Debt


(In Thousands)	December 31, 2022		December 31, 2021
Long-term debt facilities	$	3,364	$	815
Convertible notes
4.75% convertible senior notes	—		3,564
5.625% convertible senior notes	3,896		3,896
5.75% exchangeable senior notes	2,332		2,474
7.75% convertible senior notes	741		—
Trust preferred securities and subordinated notes	1,633		581
Total Accrued Interest Payable on Long-Term Debt	$	11,966	$	11,330

Recourse Subordinate Securities Financing Facilities

In 2019, a subsidiary of Redwood entered into a repurchase agreement providing non-marginable (i.e., not subject to margin calls based on the market value of the underlying collateral) recourse debt financing of certain Sequoia securities as well as securities retained from our consolidated Sequoia securitizations (Facility A in Table 16.1 above). The financing is fully and unconditionally guaranteed by Redwood, and had an interest rate of approximately 4.21% through September 2022, which increased to 5.71% from October 2022 through September 2023, and will increase to 7.21% from October 2023 through September 2024. The financing facility has a final maturity in September 2024.

In 2020, a subsidiary of Redwood entered into a repurchase agreement providing non-marginable recourse debt financing of certain securities retained from our consolidated CAFL securitizations (Facility B in Table 16.1 above). The financing is fully and unconditionally guaranteed by Redwood, with an interest rate of approximately 4.21% through February 2023, increasing to 5.71% from March 2023 through February 2024, and to 7.21% from March 2024 through February 2025. The financing facility may be terminated, at our option, beginning in February 2023, and has a final maturity in February 2025.

In the third quarter of 2021, a subsidiary of Redwood entered into a repurchase agreement providing non-marginable recourse debt financing of certain securities retained from our consolidated CAFL securitizations (Facility C in Table 16.1 above). The financing is guaranteed by Redwood, with an interest rate of approximately 4.75% through June 2024, increasing to 6.25% from July 2024 through June 2025, and to 7.75% from July 2025 to June 2026. The financing facility may be terminated, at our option, beginning in June 2023, and has a final maturity in June 2026.

Non-Recourse Business Purpose Loan Financing Facilities

During the fourth quarter of 2022, we entered into a repurchase agreement providing non-marginable, non-recourse financing primarily for BPL bridge loans (Facility E in table 16.1 above).

During the first quarter of 2022, we amended facility D (see Table 16.1 above) to increase the borrowing limit from $400 million to $600 million. During the third quarter of 2022, we amended facility D to increase the borrowing limit from $600 million to $750 million.

Recourse Business Purpose Loan Financing Facilities

During the third quarter of 2022, a subsidiary of Redwood entered into a repurchase agreement providing non-marginable financing for BPL term and BPL bridge loans (Facility F in Table 16.1 above).

During the third quarter of 2022, Facility G was reclassified to short-term debt as the maturity of this facility was less than one year. During the second quarter of 2022, Facility H was reclassified to short-term debt as the maturity of this facility was less than one year.

Convertible Notes

In the second quarter of 2022, we issued $215 million principal amount of 7.75% convertible senior notes due 2027. These notes require semi-annual interest payments at a fixed annual coupon rate of 7.75% until maturity or conversion, which will be no later than June 15, 2027. After deducting the underwriting discount and offering costs, we received $208 million of net proceeds. Including amortization of deferred debt issuance costs, the effective interest expense yield on these notes was approximately 8.50% per annum. We may elect to settle conversions either entirely in cash or in a combination of cash and shares of common stock. Upon conversion, the conversion value will be paid in cash up to at least the principal amount of the notes being converted. The initial conversion rate of the notes is 95.6823 common shares per $1,000 principal amount of notes (equivalent to a conversion price of $10.45 per common share).

In September 2019, RWT Holdings, Inc., a wholly-owned subsidiary of Redwood Trust, Inc., issued $201 million principal amount of 5.75% exchangeable senior notes due 2025. After deducting the underwriting discount and offering costs, we received $195 million of net proceeds. Including amortization of deferred debt issuance costs, the weighted average interest expense yield on these exchangeable notes is approximately 6.3% per annum. At December 31, 2022, these notes were exchangeable at the option of the holder at an exchange rate of 55.2644 common shares per $1,000 principal amount of exchangeable senior notes (equivalent to an exchange price of $18.09 per common share). Upon exchange of these notes by a holder, the holder will receive shares of our common stock. During the fourth quarter of 2022, we repurchased $10 million par value of these notes at a discount and recorded a gain on extinguishment of $2 million in Realized gains, net on our consolidated statements of income (loss). During the second quarter of 2020, we repurchased $29 million par value of these notes at a discount and recorded a gain on extinguishment of $6 million in Realized gains, net on our consolidated statements of income (loss).

In June 2018, we issued $200 million principal amount of 5.625% convertible senior notes due 2024 at an issuance price of 99.5%. These convertible notes require semi-annual interest payments at a fixed coupon rate of 5.625% until maturity or conversion, which will be no later than July 15, 2024. After deducting the issuance discount, the underwriting discount and offering costs, we received $194 million of net proceeds. Including amortization of deferred debt issuance costs and the debt discount, the weighted average interest expense yield on these convertible notes is approximately 6.2% per annum. These notes are convertible at the option of the holder at a conversion rate of 54.8317 common shares per $1,000 principal amount of convertible senior notes (equivalent to a conversion price of $18.24 per common share). Upon conversion of these notes by a holder, the holder will receive shares of our common stock. During the second quarter of 2020, we repurchased $50 million par value of these notes at a discount and recorded a gain on extinguishment of $9 million in Realized gains, net on our consolidated statements of income (loss).

In August 2017, we issued $245 million principal amount of 4.75% convertible senior notes due 2023. After deducting the underwriting discount and offering costs, we received $238 million of net proceeds. Including amortization of deferred debt issuance costs, the weighted average interest expense yield on these convertible notes is approximately 5.3% per annum. At December 31, 2022, these notes were convertible at the option of the holder at a conversion rate of 54.4764 common shares per $1,000 principal amount of convertible senior notes (equivalent to a conversion price of $18.36 per common share). Upon conversion of these notes by a holder, the holder will receive shares of our common stock. During the fourth quarter of 2022, we repurchased $22 million of convertible debt and recorded a $0.4 million dollar gain on extinguishment. During the second quarter of 2020, we repurchased $46 million par value of these notes at a discount and recorded a gain on extinguishment of $10 million in Realized gains, net on our consolidated statements of income (loss). During the third quarter of 2022, $199 million principal amount of 4.75% convertible debt and $1 million of unamortized deferred issuance costs were reclassified from long-term debt to short-term debt as the maturity of the notes was less than one year as of August 2022.

Trust Preferred Securities and Subordinated Notes

At December 31, 2022, we had trust preferred securities and subordinated notes outstanding of $100 million and $40 million, respectively. This debt requires quarterly interest payments at a floating rate equal to three-month LIBOR plus 2.25% until the notes are redeemed. The $100 million trust preferred securities will be redeemed no later than January 30, 2037, and the $40 million subordinated notes will be redeemed no later than July 30, 2037.

Under the terms of this debt, we covenant, among other things, to use our best efforts to continue to qualify as a REIT. If an event of default were to occur in respect of this debt, we would generally be restricted under its terms (subject to certain exceptions) from making dividend distributions to stockholders, from repurchasing common stock or repurchasing or redeeming any other then-outstanding equity securities, and from making any other payments in respect of any equity interests in us or in respect of any then-outstanding debt that is pari passu or subordinate to this debt.