Debt Obligations, Net

9 Months Ended

Sep. 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. We use debt to 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 to finance investments in securities and other investments. Additionally, we use corporate debt obligations to fund other aspects of our business and operations, including the repurchase of shares of our capital stock.

At September 30, 2024, we had outstanding agreements on debt obligations with several counterparties and we were in compliance with all of the related covenants. Refer to Note 3 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding these investments. Refer to Note 14 and Note 16 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding our debt obligations.

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

Table 17.1 – Debt Obligations, Net


	September 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	7	$	1,269,512	$	1,269,512	$	2,675,000	6.69	%	10/2024-5/2025	$	1,350,551
Residential investor loan warehouse facilities	3	277,536		276,827		900,000		8.29	%	6/2025-7/2025	422,636
Real estate securities repurchase facilities	6	185,393		185,393		—		6.45	%	10/2024-1/2025	250,416
Residential MSR warehouse facility	1	54,306		54,306		75,000		8.25	%	10/2024	80,392
HEI warehouse facility	1	100,302		100,302		150,000		9.52	%	11/2024	210,288
Servicer advance financing	1	156,116		155,986		240,000		7.31	%	12/2024	212,446

Recourse Subordinate Securities Financing:
CAFL securities (3)	1	269,037		267,833		N/A		7.54	%	9/2028	324,874

Long-Term Warehouse Facilities:
Residential Investor Facilities	4	696,671		695,431		1,625,000		8.16	%	10/2025-6/2026	987,286

Corporate Debt:
Promissory notes (2) (3)	3	13,663		13,663		—		7.02	%	N/A	—
Corporate Secured Revolving Financing Facility	1	150,000		144,281		250,000		10.02	%	3/2026	290,320
5.75% exchangeable senior notes (3)	1	156,666		155,772		N/A		5.75	%	10/2025	N/A
7.75% convertible senior notes (3)	1	207,410		203,525		N/A		7.75	%	6/2027	N/A
Trust preferred securities and subordinated notes	2	139,500		138,848		N/A		7.77	%	1/2037, 7/2037	N/A
9.125% Senior Notes (3)	1	60,000		57,776		N/A		9.13	%	3/2029	N/A
9.0% Senior Notes (3)	1	85,000		81,991		N/A		9.00	%	9/2029	N/A
Total Debt Obligations		$	3,821,112	$	3,801,446						$	4,129,209


	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		—		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 Warehouse Facilities:
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.

During the three months ended September 30, 2024, we terminated two recourse subordinate financing facilities entered into in 2020 and 2021, and entered into a new recourse subordinate financing facility providing non-marginable debt financing of certain securities retained from our consolidated CAFL securitizations. This financing is fully and unconditionally guaranteed by Redwood, with an interest rate of approximately 7.54% through September 2027, increasing to 10.54% from October 2027 through September 2028. This financing facility may be terminated at our option, beginning in September 2026, and has a final stated maturity in September 2028.

In March 2024, we entered into a corporate secured revolving financing facility 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. This facility has 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 months ended September 30, 2024, we repaid our 5.625% convertible senior notes and our Sequoia recourse subordinate securities financing in full.

During the nine months ended September 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.