SecProbe.io

January 23, 2023

VIA E-MAIL

Terrance P. Gallagher
UMB Fund Services, Inc.
235 West Galena Street
Milwaukee, WI 53212

Re: Redwood Real Estate Income Fund
Initial Registration Statement on Form N-2
File Nos. 333-268948 and 811-23846

Dear Mr. Gallagher:
  On December 22, 2022, Redwood Real Estate Income Fund (the “Fund”) filed a
registration statement on Form N-2 (the “Registration Statement”) under the Securities Act of
1933, as amended (the “1933 Act”) and the Investment Company Act of 1940, as amended (the
“1940 Act”).  We have reviewed the filing and have the following comments.  All capitalized
terms not otherwise defined herein have the meaning given to them in the Registration Statement.  Unless otherwise specified, references to items, instruction numbers and guides in this letter are to items and instructions in Form N-2, and the Guidelines for Form N-2, respectively. References to rules are to the rules under the 1940 Act.
GENERAL
1. We note that the Registration Statement is missing information and exhibits ( e.g., seed
financial statements of the Fund) and contains bracketed disclosures.  We may have comments on such portions when you complete them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment.  Please plan accordingly.
2. Where a comment is made with regard to disclosure in one location, it is applicable to all
similar disclosure appearing elsewhere in the Registration Statement.  Please make all conforming changes.
3. Please advise us if you expect to submit any exemptive application(s) or no action
request(s) in connection with the Registration Statement. In particular, inform us whether the Fund intends to request exemptive relief from various portions of the 1940 Act in order to issue multiple classes of shares.
4. Please tell us if you have presented or will present any “test the waters” materials to
potential investors in connection with this offering. If so, please provide us with copies of such materials.

  Page 2 of 13  FACING PAGE
5. Please remove the 814 file number reference from the facing page.
PROSPECTUS
Cover page
6. Please address the following comments related to the Fund’s investment strategy
discussion:
a. Per the discussion in Fund Summary—Investment Objective and Strategies ,
disclose that the Fund may invest in below investment grade securities or securities that would be rated below investment grade if they were rated;
b. In the second sentence of the discussion, if accurate, please move “in the United
States” after “and other real estate related debt securities” to clarify  that all of the Fund’s investments will be in the United States;
c. Briefly describe the types of investments that constitute “other real estate related
debt securities.” If the term refers to “other commercial real estate related debt securities,” please so clarify; and
d. While the Fund does not intend to use leverage in its first year of operations,
leverage is a component of the Fund’s principal investment strategy.  Please add disclosure on the Fund’s expected use of leverage and in a prominent fashion, a cross-reference to the leverage risk disclosure in the Prospectus.  ( See Item 1.1.j.)
Please ensure that all disclosure relevant to the Fund’s use of leverage contained in Guide 6 is included in the body of the Prospectus.
7. Please address the following comments related to Fund’s operation as an interval fund:
a. Disclose the information required by the first paragraph of Guide 10 ; and
b. The Fund states that the Shares will be offered for sale on a continuous basis at
the net asset value “subject to any applicable sales charges and other fees, as described herein.”  The Fund does not impose sales charges or other fees at purchase.  Please revise the statement.
8. Please address the following comments under the heading Shares are an Illiquid
Investment :
a.  Remove “generally” from the second bullet point; and
b. In the penultimate bullet point, consider adding a brief statement about the tax
implications for an investor of a return of capital.
9. If there is an e-mail address for investors to request the Fund’s SAI; annual report; semi-
annual report; or other information about the Fund and to make shareholder inquiries, please add this to the first paragraph on the back of the cover page.  ( See Item 1.d.)

  Page 3 of 13  Prospectus Summary
The Fund and the Shares
10. The disclosure states that “[t]he Investment Manager provides day-to-day investment
management services to the Fund.”  Please add disclosure to this subsection, The
Investment Manager and Sub-Adviser , and Management of the Fund—The Investment
Manager and Sub-Adviser , explaining the Sub-Adviser’s role in managing the Fund.
Investment Objectives and Strategies
11. Please add disclosure in an appropriate location(s) in the Prospectus to address the
following comments regarding the Fund’s investments:
a. Explain in the disclosure the terms “first position lien mortgages” and “senior
secured mortgages.”  In this connection, explain the material differences between the two;
b. Disclose (i) the types of investments that fall under the category “other real estate
related debt securities,” (ii) whether these investments are backed by commercial real estate assets and, (iii) whether the investments will be in the United States;
c. Per the investment strategy discussion later in the Prospectus, disclose that up to
20% of the Fund’s investments may include (i) loans secured by liens other than first mortgages (including mezzanine and other subordinated debt instruments), (ii) preferred equity interests in commercial real estate, and (iii) commercial real estate related assets in the continental United States.  Briefly explain each category of investments;
d. Explain in the disclosure the term “loan-to-value (LTV) ratio;”
e. The Fund may invest up to 20% of its total assets in short-duration fixed income
instruments.  Disclose the types of investments that fall into this category;
f. If the Fund plans to invest in distressed securities as part of its principal
investment strategy, include appropriate disclosure; and
g. Disclose that the Fund is concentrated ( i.e. invests more than 25% of total assets)
in the real estate industry.
12. The Fund states under Taxation of the Fund  that it “expects to invest in debt obligations
that will be treated as having “market discount” and/or original issue discount (“OID”).”  Please discuss OID securities in the investment strategy discussion.
13. If the Fund intends to invest in covenant-lite loans, please describe such loans and the
extent in which the Fund may invest in such loans.  Please also add attendant risk disclosure to the Principal Risk Factors  section.
14. The Sub-Adviser may originate or co-originate loans in which the Fund will invest.
Please add a brief discussion of loan origination to this subsection and include a cross reference to the more detailed discussion of loan origination in the Prospectus.
15. The Fund states that it may employ leverage through borrowing.  Please disclose the
type(s) of leverage the Fund expects to use ( e.g., bank credit facilities, issuance of

  Page 4 of 13  preferred shares, etc.).  The Fund also states that it may employ leverage through swaps
or other derivative instruments but provides no additional information on swaps or the other types of derivative instruments the Fund expects to use, how they may be employed, or attendant risks.  In an appropriate location(s) in the Prospectus, please add more detailed disclosure on the actual derivative instruments that the Fund intends to use and their associated principal risks.  ( See Letter from Barry D. Miller, Associate Director,
Office of Legal and Disclosure, to Karrie McMillan, General Counsel, Investment Company Institute, dated July 30, 2010.)
16. If derivatives will be counted towards the Fund’s 80% investment policy, please disclose
in an appropriate location in the Prospectus that derivatives will be valued based on marked-to-market value for purposes of the 80% investment policy.
17. The Fund states that it will invest in commercial mortgage loans, originate loans, and
“hold its direct loans until maturity,” yet also discloses that the average duration of its mortgages will be 18 months.  Given the Fund’s investment activities, please confirm that average duration is expected to be only 18 months and explain why this is so.
The Investment Manager and Sub-Adviser
18. Please update the Investment Manager’s and Sub-Adviser’s assets under management to
the most recent practicable date.
19. Please supplementally inform us whether the Investment Manager, Sub-adviser or any of
their affiliates may be engaged to provide loan administration or other services, including services related to bankruptcy or workout procedures.  If the Investment Manager, Sub-adviser or any of their affiliates may provide such services in connection with Fund investments, or if the Fund may invest in assets that are being serviced by any of the foregoing entities, please disclose this, along with any conflicts that may arise from these activities, in an appropriate location in the Prospectus.
The Offering
20. The minimum initial investment in the Fund is $[1,000].  Per the disclosure under
Purchasing Shares , please add that there is no minimum amount for any subsequent
investment.
Repurchase Offers
21. The disclosure states that the repurchase offer deadline “will be approximately fourteen
(14) days prior to the Valuation Date.”  Please revise to clarify that the repurchase offer deadline will be no later than the fourteenth day after the repurchase request deadline (or the next business day if the fourteenth day is not a business day).
22. Please disclose when the Fund will pay for any Shares repurchased.
Risk Factors
23. Please briefly summarize the principal risks of an investment in the Fund in the Fund
Summary , including the principal risks related to the Fund’s repurchase offers.  Please
note that the synopsis disclosure should summarize the principal risks, and not just repeat the Principal Risk Factors  disclosure.  ( See Instruction to Item 3.2.)

  Page 5 of 13  24. In the second paragraph of the subsection, please add a reference to use of leverage as an
activity that may raise conflicts of interest concerns.  Please also add a cross reference in this paragraph to the Conflicts of Interest  section.
Fund Fees and Expenses
25. In the introduction to the fee table, please (a) replace “through the Fund’s investments” in
the first sentence with “through an investment in the Fund” or similar language, and (b) delete the second sentence.
26. Please address the following comments with respect to the fee table:
a. The cover page states that the “Fund’s initial offering expenses are described
under “FUND FEES AND EXPENSES.” Address in the fee table;
b. Replace “(as a percentage of subscription amount)” with “(as a percentage of
offering price).”  In this connection please replace the term “subscription” in the context of purchase of Shares with “purchase” or a similar term;
c. The Fund is offering only Class I Shares, which are not subject to a sales load.
Delete Note 1 or supplementally explain why it should be retained;
d. The Fund states that it does not expect to employ leverage through borrowing or
use of derivatives during its first year of operations.  Please delete Note 2, the Dividend and Interest Expense on Borrowings line item, and the reference to “Dividend and Interest Expense on Borrowings” in Note 4, or supplementally explain why these should be retained;
e. The Management Fee must be shown in the table as a percentage of net assets.
Please revise Note 3 accordingly.  The Fund also may disclose that the Management Fee will be calculated on the basis of Managed Assets.  In this regard, please clarify in Note 3 that the Fund does not plan to engage in leverage during its first year of operations; therefore, the Management Fee based on net assets and Managed Assets will be the same during this period; and
f. The fee table includes a line item and accompanying note for Acquired Fund Fees
and Expenses.  If the Fund will invest in other investment companies, please add a discussion of such investments to the principal strategy discussion.
27. The Fund states that Other Expenses are estimated based on “anticipated investments in
the Fund.”  Please disclose the asset level on which fees in the fee table are based.
28. Per Item 3.11.d., please make the following statements more prominent:
The example is based on the annual fees and expenses of Class I Shares set out in
the table above and should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown.
Use of Proceeds
29. Please address the following comments:
a. Remove the reference to sales charges in the first sentence;

  Page 6 of 13  b. Reconcile the statement in the first paragraph that the Fund expects to invest
proceeds from the offering “generally not later than three months after receipt” with the statement in the second paragraph that the Fund expects that it will “be partially invested within three months;” and
c. The Fund’s disclosure on the use of temporary defensive measures appears only
in this section.  Please consider whether disclosure should be added elsewhere in the Prospectus to address the use of temporary defensive measures in response to adverse market or other conditions.
Investment Objectives and Strategies
Investment Objective
30. If the Fund’s investment objective may be changed without a vote of the majority of
shareholders, please so disclose. ( See Item 8.2.a.)
 Investment Strategies and Overview of Investment Process
31. Include a statement that the Fund’s 80% policy may be changed by the Board upon at
least 60 days’ prior written notice to shareholders.
32. Please provide a definition of duration and an example showing how an increase of 1% in
interest rates affects the value of the Fund’s assets at a given duration ( e.g., if a portfolio
has a duration of two years and interest rates increase by 1%, then it would decline in value by approximately 2%).
 —Investment Process
33. The term “continental United States” is used throughout this subsection, but not
elsewhere in the Prospectus.  If investments will be limited to the continental United States, please explain the term, and use it consistently throughout the Prospectus.
34. The first sentence suggests that only a portion of the Fund’s assets are allocated to the
Sub-Adviser.  Please clearly disclose how the Fund’s assets are allocated between the Investment Adviser and the Sub-Adviser.
35. The second and third paragraphs are titled Senior Mortgage Loans  and Subordinated
Debt , respectively.  These subheadings do not align with the reference to investments in
first-lien mortgages and senior secured mortgages in the Fund’s investment strategy.  Please revise the disclosure under Investment Process  so that it is clear how the
disclosure in the second and third paragraphs relate to the Fund’s investment strategy.
36. We note that little information is provided on the material features of the Fund’s principal
investments.  Please revise to provide a more fulsome description of each of these investments.
37. If the Fund will focus on any particular property type(s), geographic region(s) or
metropolitan area(s), please disclose the type(s) of commercial real estate, geographic regions(s) or metropolitan area(s) the Fund will focus on.

  Page 7 of 13  38. The Fund states that it will originate or co-originate loans and discusses its due diligence
process and underwriting standards.  Please also disclose the following:
a. Any limits on loan origination by the Fund;
b. Whether the Fund will be involved in servicing the loans and, if so, a description
of its servicing obligations; and
c.