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Redwood Trust, Inc. Declares a Regular Fourth Quarter Dividend and a Special Dividend Payable in the Fourth Quarter of 2003

Monday, November 10, 2003

MILL VALLEY, Calif.--(BUSINESS WIRE)--Nov. 10, 2003--Redwood Trust, Inc. (NYSE:RWT), a financial institution that invests in real estate loans, today announced the declaration of a regular and a special dividend for common shareholders for the fourth quarter of 2003.

Regular Dividend

Redwood's Board of Directors declared a fourth quarter regular cash dividend of $0.65 per share, payable on January 21, 2004 to common shareholders of record on December 31, 2003.

"For 2004, our Board of Directors has indicated that they intend to increase Redwood's regular dividend rate to $0.67 per share per quarter," said George Bull, Redwood's Chairman and CEO. "Sustaining our regular dividend rate over time is our primary financial goal."

Special Dividend

Redwood's Board of Directors also declared a special cash dividend of $4.75 per share, payable on December 5, 2003 to common shareholders of record on November 28, 2003.

Bull commented, "Management is proud to deliver this special dividend to shareholders. An exceptional housing market during the last few years has made this dividend possible. While the payment of special dividends could recur, it should not be relied on going forward. Redwood's regular dividend rate is meant to give an indication to shareholders of the level of dividend distribution that management and the Board believe Redwood can reasonably support in the future."

Harold Zagunis, Redwood's CFO, said, "The November 2003 special dividend represents the distribution of a portion of the REIT taxable income we earned in 2003. As we did in the prior year, we also intend to defer until 2004 the distribution of a portion of 2003's REIT taxable income. We expect that the amount we will defer will equal two to three quarters of dividends at our 2004 regular dividend rate. We also intend to retain approximately 10% of the ordinary REIT taxable income we earned during 2003. Retaining earnings helps to build book value per share, and should help to support long-term earnings and dividend growth. We currently expect that our November 2003 special dividend will be the only special dividend we will need to declare in order to meet our REIT distribution requirements for 2003 income."

"We expect to designate a portion of our dividends declared during 2003 as a distribution of long-term capital gain income earned by Redwood during 2003," Zagunis continued. "Many of our tax-paying shareholders should benefit to the extent that they can take advantage of the lower tax rate on long-term capital gain distributions. We will distribute information on the composition of our 2003 dividends prior to January 31, 2004."

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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the federal securities laws that inherently include certain risks and uncertainties. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, among other things, changes in interest rates on our mortgage assets and borrowings, changes in prepayment rates on our mortgage assets, general economic conditions, particularly as they affect the price of mortgage assets and the credit status of borrowers, and the level of liquidity in the capital markets, as it affects our ability to finance our mortgage asset portfolio, and other risk factors outlined in the Company's 2002 Annual Report on Form 10-K (available on the Company's Web site or by request to the Contacts listed above). Other factors not presently identified may also cause actual results to differ. No one should assume that results or trends projected in or contemplated by the forward-looking statements included above will prove to be accurate in the future. We will revise our outlook from time to time and frequently will not disclose such revisions publicly.

    CONTACT: Redwood Trust, Inc.
             Harold Zagunis/Nicole Klock, 415-389-7373

    SOURCE: Redwood Trust, Inc.

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