Redwood Trust said it is currently seeing a very robust pipeline of potential CMBS transactions.

Speaking at this month's JPMorgan 10th Annual SMid Cap Conference, Brett Nicholas, executive chief operating and investment officer at Redwood Trust, said the REIT was originating mezzanine loans and preferred equity investment on stabilized properties.

"Our focus is financing the gap that exists between the amount of equity a borrower will put in to our property and the amount of financing a senior lender will provide," Nicholas said.

At the end of November, Redwood's CMBS portfolio was almost $140 million average of five-year maturity, yields over 10%, and has an average LTV of 71%. The company plans on financing this portfolio, Nicholas said. This will allow it to recycle capital back into the commercial business and generate higher returns on this portfolio.

"We have unique credit expertise and work with portfolio, balance sheet lenders, CMBS aggregators and also the agencies on multi-family," he said. "Our access to capital comes from a senior funding through partnerships with several major financial institutions."


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