Redwood Trust, Inc. filed a Form 8-K on November 3, 2026, disclosing a board-approved plan to revoke its REIT election and convert to a C corporation beginning with its 2027 taxable year, alongside a waiver and repurchase agreement covering $53,125,000 in trust preferred securities and the adoption of a tax benefits preservation plan.

Key Highlights

  • C-Corp Conversion Plan approved: The Board unanimously approved a plan to revoke the company's REIT election for U.S. federal income tax purposes in the first quarter of 2027, transitioning to a C corporation beginning with its 2027 taxable year.
  • Trust preferred securities repurchase: The company agreed to repurchase $53,125,000 liquidation amount of Trust Preferred Securities from Hildene Capital Management, LLC at 85% of liquidation amount, or $45,156,250, plus any accumulated but unpaid distributions.
  • Three-installment payment schedule: The Aggregate Repurchase Price will be paid in three deposits, with the last installment due on the earlier of the REIT revocation filing date or February 15, 2027.
  • Cash fee of $500,000: The company also agreed to pay Hildene Capital Management a cash fee of $500,000 under the terms of the agreement.
  • REIT Maintenance Covenant waived: Hildene, as holder of a majority of the outstanding Trust Preferred Securities, agreed to waive the company's compliance with the REIT Maintenance Covenant, effective on the Last Deposit Date.
  • Tax benefits preservation plan adopted: The Board declared a dividend of one Right for each outstanding share of Common Stock, with a record date of November 16, 2026, at an exercise price of $20.00 per Right, to protect the company's net operating losses and other tax attributes.

Redwood Trust's REIT-to-C-Corp Transition and Related Agreements

According to the filing, Redwood Trust's Board of Directors unanimously approved the C-Corp. Conversion Plan, under which the company intends to revoke its REIT election for U.S. federal income tax purposes in the first quarter of 2027. The company disclosed it plans to remain in compliance with REIT requirements through December 31, 2026, and into 2027 until it makes a filing with the Internal Revenue Service pursuant to Section 856(g)(2) of the Internal Revenue Code. The filing noted that upon consummation of the C-Corp. Conversion Plan, the restrictions on transfer and ownership of capital stock set forth in Article XI of the company's Charter will cease to be in effect.

In connection with the planned conversion, the company entered into a Waiver and Repurchase Agreement dated November 3, 2026, with Hildene Capital Management, LLC, acting for itself and on behalf of its managed entities. Under this agreement, the company agreed to repurchase $53,125,000 liquidation amount of Trust Preferred Securities issued by Redwood Capital Trust I at a price equal to 85% of liquidation amount, totaling $45,156,250 as the Aggregate Repurchase Price, plus accumulated but unpaid distributions. The company also agreed to pay a cash fee of $500,000 to the Investor. As consideration, Hildene, holding a majority of the outstanding Trust Preferred Securities, agreed to waive the company's compliance with the REIT Maintenance Covenant under the Junior Subordinated Indenture dated December 12, 2006, effective on the Last Deposit Date.

Separately, the Board adopted a Tax Benefits Preservation Plan on November 3, 2026, to protect the company's net operating losses and certain other tax attributes. The filing stated that the plan is intended to guard against a possible limitation arising from an "ownership change" as defined in Section 382 of the Internal Revenue Code, which could occur if the company's 5-percent shareholders increase their ownership by more than 50 percentage points over a rolling three-year period. Each Right entitles its holder to purchase one one-thousandth of a share of Series X Junior Participating Preferred Stock at $20.00 per Right, subject to adjustment, with Computershare Trust Company, N.A. serving as rights agent.

What Was Disclosed

Redwood Trust (NYSE:RWT) disclosed a board-approved C-Corp conversion plan, a $53,125,000 trust preferred securities repurchase agreement with Hildene Capital Management at 85% of liquidation amount, a $500,000 cash fee, a REIT Maintenance Covenant waiver, and adoption of a tax benefits preservation plan with a November 16, 2026 record date.