Redwood Trust Announces Pricing Of 4.75% Convertible Senior Notes Due 2023

MILL VALLEY, Calif., Aug. 14, 2017

Interest on the Notes will be payable semiannually on February 15 and August 15, beginning on February 15, 2018; the Notes will mature on August 15, 2023. Upon conversion, holders of the Notes will receive shares of Redwood's common stock. If Redwood undergoes a "fundamental change" (as defined in the prospectus supplement relating to the Notes), subject to certain conditions, holders of the Notes may require Redwood to repurchase for cash all or part of such holders Notes at 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.

Holders may convert any of their Notes into shares of Redwood's common stock at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day prior to the maturity date, unless the Notes have been previously repurchased or redeemed by Redwood.  Any conversions of Notes into shares of Redwood common stock will be subject to certain ownership limitations (as more fully described in the prospectus supplement relating to the Notes). The initial conversion rate for each $1,000 aggregate principal amount of the Notes is 53.8394 shares of common stock, equivalent to a conversion price of approximately $18.57 per share, which is an approximately 12.5% premium to the closing price of Redwood's common stock on August 14, 2017.

Redwood will not be permitted to redeem the Notes at its option, except to the extent necessary to preserve its status as a real estate investment trust for U.S. federal income tax purposes.

Redwood intends to use the net proceeds from this offering for general corporate purposes, which may include the repayment of debt, including a portion of the $250 million outstanding aggregate principal amount of its 4.625% convertible senior notes due 2018 repurchased in the open market or in privately negotiated transactions or repaid at maturity on April 15, 2018, and to fund its business and investment activity. Pending such uses, Redwood may use a portion of the net proceeds from this offering to temporarily reduce borrowings under its short-term residential loan warehouse facilities and its short-term real estate securities repurchase facilities.

J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers for the proposed offering. Goldman Sachs & Co. LLC is acting as lead manager and JMP Securities LLC is acting as co-manager. A copy of the prospectus supplement and prospectus relating to these securities may be obtained, when available, by contacting: J.P. Morgan Securities LLC c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717 or by calling 1-866-803-9204; or Wells Fargo Securities, LLC c/o Equity Syndicate Department, 375 Park Avenue, 4th Floor, New York, New York 10152 or by calling 1-800-326-5897 or by emailing cmclientsupport@wellsfargo.com.

This announcement shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.  This announcement is being issued pursuant to and in accordance with Rule 134 under the Securities Act of 1933, as amended.  The offering was made only by means of a prospectus supplement and the accompanying prospectus, forming a part of the effective registration statement.