2023-06-12 16:43:31 ET
Redwood Trust ( NYSE: RWT ) and funds managed by Oaktree Capital Management launched on Monday a joint venture to invest in business purpose bridge loans originated by Redwood's CoreVest American Finance Lender.
With banks tightening lending standards due to higher interest rates and uncertainty over the economic outlook, lending by non-bank institutions has been increasing.
"We continue to see immense opportunity for our bridge lending platform, particularly as other lenders reduce their footprint," said Redwood President Dash Robinson. "The JV allows us to efficiently leverage our own investment capital and serve our customers in expanded ways."
The total equity commitment to the joint venture, funded 80% by Oaktree and 20% by Redwood ( RWT ), has the potential to finance more than $1B of new bridge loans, inclusive of proceeds from secured financing, the companies said. The vehicle has a three-year reinvestment period during which time principal repayments can be redeployed.
The venture is designed to purchase the different kinds of bridge loans that CoreVest originates, including multifamily bridge, build-for-rent and single-asset bridge loans, and may invest opportunistically in loans sourced from third parties.
It intends to initially finance its portfolio with warehouse facilities that may subsequently be refinanced through securitizations or longer-term credit facilities, with the potential to enhance returns and create additional deployment capacity, Redwood ( RWT ) said.
SA analyst Geoffrey Seiler says even as Redwood Trust ( RWT ) plans to cut its dividend, its valuation is appealing.
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Redwood Trust, Oaktree funds form joint venture in invest in bridge loans