Redwood Trust, Inc. (RWT) Plans 2027 C-Corp Conversion and 1-for-5 Reverse Split

What happened

Redwood Trust plans to convert from a REIT, a real estate investment trust, to a taxable C-corporation in 2027. It also proposes a $50 million exchange offer for common stock in return for 11.00% Series B preferred shares, and has scheduled a 1-for-5 reverse split for January 4, 2027; the offer has not commenced.

Proposed

Global impact / market context

The proposed conversion changes how Redwood is taxed and is part of its stated effort to lower its cost of capital, but any benefit is still expected rather than realized. The preferred-stock exchange could change the mix of shares and financing costs, while the reverse split changes share count and price mechanically, not company value.

Analyst inference

Redwood estimates it has about $304 million in federal net operating losses, or NOLs, which can offset future taxable income. Their use could be substantially limited by an ownership change under Section 382, a tax rule; its 4.9% rights-plan threshold is intended to protect these tax assets.

Confirmed

What to watch

1. Watch for the exchange offer to begin during the week of November 9, 2026, and for Redwood to announce final terms, including whether it increases the offer. Confirmed
2. Track whether the planned C-corporation conversion takes effect in 2027; its expected cost-of-capital benefit is not yet realized and remains dependent on the proposed change. Proposed
3. Watch the January 4, 2027 reverse split and any ownership changes near the 4.9% threshold, since restricted NOL use could reduce future tax offsets. Analyst inference

Evidence

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