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Strategic Investments
 6 Months Ended
Jun. 30, 2025
Investments, All Other Investments [Abstract]  
Strategic Investments Servicing Investments
Servicing Investments at June 30, 2025 and December 31, 2024 are summarized in the following table.
Table 11.1 – Components of Servicing Investments
(In Thousands)June 30, 2025December 31, 2024
Servicer advance investments, at fair value$236,225 $233,820 
Excess MSRs, at fair value29,940 32,274 
MSRs, at fair value31,839 31,589 
Total Servicing Investments$298,004 $297,683 
We account for our Servicer advance investments, Excess MSRs and MSRs at fair value. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these components and related transactions.
For the three months ended June 30, 2025 and 2024, income from Servicing investments included Other interest income of $7 million and $8 million, respectively, Investment fair value changes, net of negative $3 million and positive $10 million, respectively, and Servicing income, net of $2 million and $4 million, respectively. For the six months ended June 30, 2025 and 2024, income from Servicing investments included Other interest income of $14 million and $16 million, respectively, Investment fair value changes, net of negative $6 million and positive $8 million, respectively, and Servicing income, net of $5 million and $8 million, respectively.
Strategic Investments
Strategic Investments at June 30, 2025 and December 31, 2024 are summarized in the following table.
Table 12.1 – Components of Strategic Investments
(In Thousands)June 30, 2025December 31, 2024
Strategic investments, equity method$37,138 $48,767 
Strategic investments, measurement alternative26,594 25,896 
Strategic investments, at fair value3,460 3,460 
Other investments11,063 — 
Total Strategic Investments$78,255 $78,123 
Income from Strategic Investments for the three and six months ended June 30, 2025 and 2024 are summarized in the following tables.
Table 12.2 – Components of Income From Strategic Investments, net
Three Months Ended June 30,
(In Thousands)20252024
Other (loss) income, net (1)
$(210)$(1)
Investment fair value changes, net (2)
(132)(1,450)
Total Strategic Investments Income, Net$(342)$(1,451)
Six Months Ended June 30,
(In Thousands)20252024
Other income (loss), net (1)
$969 $(945)
Investment fair value changes, net (2)
(212)(800)
Total Strategic Investments Income, Net$757 $(1,745)
(1)Represents net equity method earnings from our Strategic investments that are accounted for under the equity method.
(2)Includes Investment fair value changes related to our Strategic investments that are accounted for under the measurement alternative for equity securities without readily determinable fair values. For the three and six months ended June 30, 2025, includes Investment fair value earnings of $0.1 million and $0.2 million, respectively, under the measurement alternative. For both the three and six months ended June 30, 2024, we recognized net equity method losses of $1 million and $0.8 million, respectively, under the measurement alternative.
Depending on the terms of the strategic investments, we may account for these investments under the fair value option, as non-marketable equity securities under the equity method of accounting or the measurement alternative for equity securities without readily determinable fair values. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these components and related transactions.
Joint Ventures
In the second quarter of 2023, we established a joint venture with an institutional investment manager to invest in residential investor bridge loans originated by our CoreVest subsidiary. At June 30, 2025, the carrying value of our investment in the joint venture was $2 million. We account for our investment in the joint venture under the equity method of accounting as we have a 20% non-controlling interest, but are deemed to be able to exert significant influence over the affairs of the joint venture. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. For the three and six months ended June 30, 2025, we recognized net equity method losses of $0.1 million and net equity method gains of $0.1 million, respectively, through Other income, net in our Consolidated statements of income.
In the first quarter of 2024, we established a joint venture with another institutional investment manager to invest in residential investor bridge and term loans originated by us. At June 30, 2025, the carrying value of our investment in the joint venture was $7 million. We account for our investment in the joint venture under the equity method of accounting as we have a minority non-controlling interest approximating 20% across both Redwood's direct equity capital contribution to joint venture entities and joint venture co-investments, and we are deemed to be able to exert significant influence over the affairs of the joint venture. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. For the three and six months ended June 30, 2025 we recognized net equity method earnings of $1 million and $2 million, respectively, through Other income, net in our Consolidated statements of income.
In the second quarter of 2025, Redwood and this joint venture entity entered into a promissory note receivable with a taxable subsidiary of the joint venture entity. The note provides for a total revolving credit facility of up to $150 million, with interest accruing at one-month SOFR plus a spread. Interest payments are due quarterly and may be paid in cash or capitalized as payment-in-kind ("PIK") interest. The note receivable matures on June 1, 2031 with two optional one-year extensions available at the joint venture's election, and can be prepaid at any time without penalty. At June 30, 2025, the outstanding balance on this note receivable was $8 million and is included in Other Investments in Table 12.1 above. For the three and six-month periods ended June 30, 2025, we recognized $0.1 million in interest on this note.
In the first quarter of 2025, we made a minority equity investment in a newly-formed mortgage loan origination company focused on originating construction loans for builders of single-family homes. In connection with our investment, this mortgage loan origination company committed to sell loans it originates to Redwood and future capital partners. At June 30, 2025, the carrying value of our investment in this company was $3 million. We account for our investment under the equity method of accounting as we currently have a minority non-controlling interest equal to 35% in this company, and we are deemed to be able to exert significant influence over the affairs of this company. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. As this company continues to ramp up operations, we did not recognize any net equity method earnings for both the three and six months ended June 30, 2025. During the three months ended June 30, 2025, we acquired $25 million of residential construction loans from this company.
See Note 8 for further information on residential bridge loans sold to these joint ventures