Redwood Trust Inc. (NYSE: RWT) has launched a joint venture with funds managed by Oaktree Capital Management L.P. to invest in business purpose bridge loans originated by CoreVest American Finance Lender, a division of Redwood.
According to the companies, the total equity commitment to the joint venture – which is 80% funded by Oaktree and 20% by Redwood – has the potential to finance over $1 billion of newly-originated bridge loans, inclusive of proceeds from secured financing.
The joint venture is designed to purchase the bridge loans that CoreVest originates, including multifamily bridge, build-for-rent and single-asset bridge loans, and it may invest opportunistically in loans sourced from third parties. The joint venture 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.
The vehicle has a three-year reinvestment period during which time principal repayments can be redeployed.
“We are pleased to be partnering with Oaktree, a premiere global investment manager, in a joint venture that will enhance our ability to provide solutions to a broad spectrum of real estate investors at an important point in the housing cycle,” said Dash Robinson, president of Mill Valley, California-based Redwood. “We continue to see immense opportunity for our bridge lending platform, particularly as other lenders reduce their footprint. The JV allows us to efficiently leverage our own investment capital and serve our customers in expanded ways.”
“We are thrilled to partner with Redwood and CoreVest in a win-win-win structure maintaining credit availability for residential borrowers, providing reliable capital to support originations growth, and enabling differentiated access to an attractive asset class for our investors,” said Dante Quazzo, vice president in Oaktree’s global opportunities strategy. “We have long been impressed with the quality of CoreVest’s operations, underwriting, sponsor relationships, and distribution network. Housing affordability is top of mind for many Americans, and this partnership creates opportunity for Oaktree to invest alongside a top-tier business purpose lender while supporting new and improved housing stock.”
