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8-K - REDWOOD TRUST INC | v209373_8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
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CONTACTS:
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Diane
L. Merdian
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Redwood
Trust, Inc.
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(415)
389-7373
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January
31, 2011
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Mike
McMahon
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(415)
384-3805
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REDWOOD
TRUST, INC. ANNOUNCES DIVIDEND DISTRIBUTION TAX INFORMATION FOR
2010
MILL VALLEY, Calif. – January 31, 2011 – Redwood
Trust, Inc. (NYSE:RWT) today announced tax
information regarding its dividend distributions for 2010.
Shareholders
should check the tax statements they receive from brokerage firms to make sure
the Redwood dividend distribution information reported in those statements
conforms to the information reported here. Set forth in this press
release are Redwood’s expectations with respect to federal income
tax. Shareholders should consult their tax advisors to determine the
amount of taxes that should be paid on Redwood’s dividend distributions for
federal, state, and other income tax purposes.
Under the
federal income tax rules applicable to real estate investment trusts (REITs)
such as Redwood, the $0.25 per share fourth quarter 2009 regular common stock
dividend distribution that had a record date of December 31, 2009 and a payment
date of January 21, 2010 was reportable on shareholders’ 2009 income tax
returns.
All of
the other common stock dividend distributions paid during 2010 are reportable on
shareholders’ 2010 federal income tax returns, including three $0.25 per share
quarterly regular dividend distributions. In addition, the $0.25 per
share fourth quarter 2010 common stock regular dividend distribution with a
record date of December 31, 2010 that was paid on January 21, 2011 is also
reportable on shareholders’ 2010 federal income tax returns.
Thus, for
2010, Redwood shareholders that held stock for this entire period should report
a total of $1.00 per share of common stock dividend distributions for federal
income tax purposes.
Under the
federal income tax rules applicable to REITs, Redwood’s 2010 dividend
distributions are expected to be characterized for income tax purposes as 62%
ordinary income and 38% return of capital. None of Redwood’s 2010
dividend distributions is expected to be characterized for federal income tax
purposes as long-term capital gain dividends.
As a
REIT, the portion of Redwood’s dividend distributions that is characterized as
ordinary income under the applicable federal income tax rules is generally taxed
at full ordinary income tax rates. The portion of Redwood’s dividend
distributions characterized as a return of capital under the applicable federal
income tax rules is not generally taxable (provided it does not exceed a
shareholder’s tax basis in their Redwood shares), and it reduces a shareholder’s
basis for shares held at each quarterly distribution date (but not to below
zero).
The table
below provides more detailed information on the expected federal income tax
characterization for each of Redwood’s common stock dividend distributions that
were paid for 2010.
Common
Stock (CUSIP 758075 40 2)
Dividend
Distribution
Type
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Declaration
Dates
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Record
Dates
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Payable
Dates
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Total
Distribution
Per
Share
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Ordinary
Income
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Return
of
Capital
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Long-Term
Capital Gains
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#
of
Shares
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Total
$
Paid
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Regular
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3/17/2010
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3/31/2010
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4/21/2010
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$0.2500
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$0.1553
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$0.0947
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$0.0000
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77,750,697
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$19,437,674
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Regular
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5/18/2010
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6/30/2010
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7/21/2010
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$0.2500
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$0.1553
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$0.0947
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$0.0000
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77,908,439
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$19,477,110
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Regular
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9/9/2010
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9/30/2010
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10/21/2010
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$0.2500
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$0.1554
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$0.0946
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$0.0000
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77,984,222
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$19,496,056
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Regular
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11/15/2010
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12/31/2010
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1/21/2011
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$0.2500
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$0.1554
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$0.0946
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$0.0000
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78,124,668
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$19,531,167
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Total
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$1.0000
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$0.6214
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$0.3786
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$0.0000
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$77,942,007
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For
shareholders that are corporations, Redwood’s dividend distributions are not
generally eligible for the corporate dividends-received deduction.
No
portion of Redwood’s 2010 dividend distributions is expected to consist of
unrelated business taxable income (UBTI), which is subject to specialized tax
reporting and other rules applicable for certain tax exempt
investors.
In both
2009 and 2010, Redwood distributed dividends in excess of the minimum
requirement under the federal income tax rules applicable to
REITs. For the 2009 taxable year, Redwood did not report REIT taxable
income or have current or accumulated earnings and profits, and all of its
dividend distributions for 2009 were characterized for federal income tax
purposes as a return of capital to shareholders. As used in this
press release, “REIT taxable income (loss)” is that portion of total taxable
income that is earned at Redwood Trust, Inc. and its qualifying REIT
subsidiaries.
Redwood’s
2010 federal income tax return is expected to be filed with the Internal Revenue
Service in September 2011. For the 2010 taxable year, after the
application of loss carry-forwards, Redwood again does not expect to report REIT
taxable income on its federal income tax return. However, Redwood and
its qualified REIT subsidiaries expect to report approximately $48.5 million in
combined net capital gains plus ordinary income (excluding the effect of loss
carry-forwards) for the 2010 taxable year. Of the $48.5 million,
$44.5 million is attributable to capital gains recognized for income tax
purposes primarily in the first and second quarter of 2010. Under the
federal income tax rules applicable to REITs, these combined net capital gains
plus ordinary income (excluding the effect of loss carry-forwards) are expected
to cause approximately $48.5 million of Redwood’s 2010 dividend distributions to
be characterized for federal income tax purposes as ordinary income to
shareholders for 2010. None of the 2010 dividend distributions is
expected to be characterized as capital gains because, under the federal income
tax rules applicable to REITs, in determining the characterization of dividend
distributions, capital loss carry-forwards offset 2010 capital
gains.
For more
information about Redwood Trust, Inc., please visit our website at: www.redwoodtrust.com.
* * *
Cautionary
Statement: This press release contains forward-looking
statements within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
numerous risks and uncertainties. Our actual results may differ from our
beliefs, expectations, estimates, and projections and, consequently, you should
not rely on these forward-looking statements as predictions of future events.
Forward-looking statements are not historical in nature and can be identified by
words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “believe,”
“intend,” “seek,” “plan” and similar expressions or their negative forms, or by
references to strategy, plans, or intentions. These forward-looking statements
are subject to risks and uncertainties, including, among other things, (i) that
the expectations described herein change when Redwood’s 2010 federal income tax
return in completed and filed in 2011 and (ii) the other risks and uncertainties
described in our Annual Report on Form 10-K for the year ended December 31,
2009, under the caption “Risk Factors.” Other risks, uncertainties, and factors
that could cause actual results to differ materially from those projected may be
described from time to time in reports we file with the Securities and Exchange
Commission (SEC), including reports on Forms 10-Q and 8-K. We undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Statements
regarding the following subjects, among others, are forward-looking by their
nature: (i) the expected characterization for federal income tax purposes of
Redwood’s 2010 dividend distributions, (ii) the expectation that Redwood will
report a taxable loss for 2010, and (iii) the expectation that Redwood will
report approximately $48.5 million in combined net capital gains plus ordinary
income (excluding the effect of loss carry-forwards) for the 2010 taxable year
and the expectation that $44.5 million of that amount will attributable to
capital gains recognized for income tax purposes primarily in the first and
second quarter of 2010.