Redwood Trust Announces $750 Mln Capital Partnership With CPP Investments

(RTTNews) - Redwood Trust, Inc. (RWT) and Canada Pension Plan Investment Board also known as CPP Investments revealed a strategic capital partnership worth $750 million on Tuesday.

This partnership includes a fresh $500 million Asset Joint Venture and a $250 million secured corporate financing facility extended by CPP Investments to Redwood.

The Joint Venture will focus on investing in Redwood's residential investor bridge and term loans, to reach over $4 billion in total acquisitions.

The management of these assets on behalf of the Joint Venture will be handled by Redwood and its affiliated companies.

The Equity contribution to the Joint Venture could be as high as $500 million, with 80 percent coming from CPP Investments and 20 percent from Redwood.

Redwood will receive continuous fees for overseeing the Joint Venture's administration and may earn extra performance fees upon reaching specific return targets.

The secured corporate financing will have a maximum capacity of $250 million and a two-year term, extendable by one year.

Moreover, CPP Investments will be granted warrants to purchase Redwood common stock initially valued at around $15 million, with the possibility of acquiring an extra $36 million if certain joint venture deployment goals are met.