Debt Obligations, Net

6 Months Ended

Jun. 30, 2024

We enter into loan warehouse facilities, repurchase agreements ("repo"), recourse subordinate securities financings, and other forms of collateralized (and generally uncommitted) borrowings with several banks and major investment banking firms. Additionally, we have various forms of corporate debt to finance our investments and operations. At June 30, 2024, we had outstanding agreements on debt obligations with several counterparties and we were in compliance with all of the related covenants.

The following tables summarize our debt obligations at June 30, 2024 and December 31, 2023.

Table 17.1 – Debt Obligations, Net


	June 30, 2024
(Dollars in Thousands)	Number of Facilities or Issuances	Principal Amount		Carrying Value		Facility Capacity		Weighted Average Interest Rate (1)		Final Stated Maturity	Carrying Value of Collateral

Short-Term Warehouse Facilities and Other
Residential consumer loan warehouse facilities	6	$	886,801	$	886,802	$	1,650,000	7.21	%	10/2024-5/2025	$	957,143
Residential investor loan warehouse facilities	1	5,931		5,931		350,000		7.39	%	6/2025	7,377
Real estate securities repurchase facilities	5	87,924		87,924		—		6.67	%	7/2024-9/2024	123,289
Residential MSR warehouse facility	1	45,645		45,645		50,000		8.59	%	10/2024	86,152
HEI warehouse facility	1	103,446		103,446		150,000		9.85	%	11/2024	212,422
Servicer advance financing	1	146,110		145,785		240,000		7.69	%	12/2024	227,363

Recourse Subordinate Securities Financings:
Sequoia securities (3)	1	121,123		121,123		N/A		7.21	%	9/2024	183,922
CAFL securities 1 (3)	1	97,366		97,366		N/A		7.21	%	2/2025	128,526
CAFL securities 2 (3)	1	52,954		52,954		N/A		4.75	%	6/2026	116,425








Long-Term Residential Investor Facilities	6	991,843		989,939		2,175,000		8.53	%	7/2025-6/2026	1,360,667

Corporate Debt:
Promissory notes (2) (3)	3	14,887		14,887		—		7.05	%	N/A	—
$250 Million Facility	1	125,000		118,327		250,000		10.35	%	3/2026	297,619
5.625% convertible senior notes (3)	1	107,339		107,339		N/A		5.63	%	7/2024	N/A
5.75% exchangeable senior notes (3)	1	156,666		155,557		N/A		5.75	%	10/2025	N/A
7.75% convertible senior notes (3)	1	207,410		203,214		N/A		7.75	%	6/2027	N/A
Trust preferred securities and subordinated notes	2	139,500		138,836		N/A		7.84	%	1/2037, 7/2037	N/A
9.125% Senior Notes (3)	1	60,000		57,677		N/A		9.13	%	3/2029	N/A
9.0% Senior Notes (3)	1	85,000		81,874		N/A		9.00	%	9/2029	N/A
Total Debt Obligations		$	3,434,945	$	3,414,626						$	3,700,905


	December 31, 2023
(Dollars in Thousands)	Number of Facilities or Issuances	Principal Amount		Carrying Value		Facility Capacity		Weighted Average Interest Rate (1)		Final Stated Maturity	Carrying Value of Collateral

Short-Term Warehouse Facilities and Other
Residential consumer loan warehouse facilities	4	$	796,537	$	796,537	$	1,150,000	7.27	%	2/2024-12/2024	$	907,742
Residential investor loan warehouse facilities	2	71,851		71,719		455,000		8.14	%	5/2024-6/2024	95,225
Real estate securities repurchase facilities	3	82,622		82,622		0		7.01	%	1/2024-3/2024	122,110
Residential MSR warehouse facility	1	47,858		47,858		50,000		8.60	%	10/2024	76,560
HEI warehouse facility	1	122,659		122,659		150,000		9.89	%	8/2024	237,973
Servicer advance financing	1	154,369		153,654		240,000		7.71	%	12/2024	225,345

Recourse Subordinate Securities Financings:
Sequoia securities (3)	1	124,552		124,552		N/A		7.21	%	9/2024	175,096
CAFL securities 1 (3)	1	101,228		101,228		N/A		5.71	%	2/2025	124,793
CAFL securities 2 (3)	1	57,982		57,982		N/A		4.75	%	6/2026	112,813








Long-Term Residential Investor Facilities	6	1,023,384		1,021,708		2,350,000		8.14	%	3/2025-12/2026	1,327,907

Corporate Debt:
Promissory notes (2) (3)	3	16,063		16,063		N/A		6.97	%	N/A	—
5.625% convertible senior notes (3)	1	142,977		142,558		N/A		5.63	%	7/2024	N/A
5.75% exchangeable senior notes (3)	1	156,666		155,138		N/A		5.75	%	10/2025	N/A
7.75% convertible senior notes (3)	1	210,910		206,032		N/A		7.75	%	6/2027	N/A
Trust preferred securities and subordinated notes	2	139,500		138,813		N/A		7.90	%	1/2037, 7/2037	N/A
Total Debt Obligations		$	3,249,158	$	3,239,123						$	3,405,564

(1)Variable rate borrowings are based on 1- or 3-month AMERIBOR or SOFR, plus an applicable spread.

(2)Promissory notes payable on demand to lender with 90-day notice.

(3)Borrowing has a fixed interest rate at period end.

Facilities and Other Financing

We use debt financing obtained through several different types of borrowing facilities to, among other things, finance the acquisition and/or origination of residential consumer and residential investor mortgage loans (including those we acquire or originate in anticipation of sale or securitization), and finance investments in securities and other investments. At June 30, 2024, Redwood and or its subsidiaries have entered into eight short-term warehouse facilities to finance our residential consumer loans, MSRs and unsecuritized HEIs totaling $1.85 billion of total capacity, and seven residential investor loan facilities totaling $2.53 billion of total capacity to finance our residential investor loans.

Servicer advance financing consists of non-recourse short-term securitization debt used to finance servicer advance investments. We consolidate the securitization entity that issued the debt, but the entity is independent of Redwood and the assets and liabilities are not owned by and are not legal obligations of Redwood.

Recourse Subordinate Securities Financing Facilities

At June 30, 2024, a subsidiary of Redwood had a repurchase agreement providing non-marginable (i.e., not subject to margin calls based solely on the lender's determination, in its discretion, of the market value of the underlying collateral that is non-delinquent) recourse debt financing of certain Sequoia securities as well as securities retained from our consolidated Sequoia securitizations. The financing was fully and unconditionally guaranteed by Redwood, and had an interest rate of approximately 4.21% through September 2022, 5.71% from October 2022 through September 2023, and 7.21% from October 2023 through final maturity in September 2024. In July 2024, this repurchase facility was refinanced into a new, non-recourse resecuritization, with a principal balance of $205 million, a blended interest rate of 8.5%, and a final stated maturity date of December 2054. The collateral for the July 2024 resecuritization includes Sequoia securities that had been financed with our recourse subordinate securities financing, Sequoia securities financed through other facilities or previously unfinanced Sequoia securities.

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. 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 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. 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.

Corporate Debt

We use corporate debt obligations to fund other aspects of our business and operations, including the repurchase of shares of our capital stock.

In connection with our acquisition of Riverbend, we assumed promissory notes that are payable on demand with a 90-day notice from the lender or which may be repaid by us with a 90-day notice. These unsecured, non-marginable, recourse notes were issued in three separate series with fixed interest rates between 6% and 8%.

In March 2024, we entered into a corporate secured revolving financing facility with CPP Investments to provide non-marginable recourse debt financing secured by previously unencumbered assets, such as retained Residential Consumer and Residential Investor subordinate securities and other investments, as well as equity in certain operating subsidiaries. At June 30, 2024, this facility had a capacity of $250 million and a two-year term, with a one-year extension option.

In January 2024, Redwood issued $60 million of 9.125% Senior Notes due in 2029. The Senior Notes are senior unsecured obligations of Redwood and bear interest at a rate equal to 9.125% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on June 1, 2024. The Senior Notes mature on March 1, 2029. We may redeem the Senior Notes, in whole or in part, at any time on or after March 1, 2026 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

In June 2024, Redwood issued $85 million of 9.0% Senior Notes due in 2029. The Senior Notes are senior unsecured obligations of Redwood and bear interest at a rate equal to 9.0% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on September 1, 2024. The Senior Notes mature on September 1, 2029. We may redeem the Senior Notes, in whole or in part, at any time on or after September 1, 2026 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

During the three and six months ended June 30, 2024, we repurchased $9 million and $36 million par value, respectively, of our 5.625% convertible senior notes and we repaid these notes in full in July 2024.

During the six months ended June 30, 2024, we repurchased $4 million par value of our 7.75% convertible senior notes at a discount and recorded a gain on extinguishment of $0.1 million in Realized gains, net on our consolidated statements of income.