Redwood Mortgage Investors IX (RWDMU) stock intrinsic value fair value estimate & owner earnings analysis

Redwood Mortgage Investors IX, LLC is a pooled fund that lends money to real-estate borrowers, mainly through first and second deeds of trust on properties in the San Francisco Bay Area and elsewhere in California. Its units are issued at $1 each and are not listed anywhere; investors can only exit through a quarterly redemption program that the manager can suspend and that is capped at 5% of units a year. Figures below are per $1 unit and are our estimate of what a unit is worth, not a price at which it can be freely sold. About $58 million of loans were outstanding at the end of 2025 at a 10.1% average rate. How we measured earnings. The fund has no stock compensation and no equipment, so owner earnings are essentially operating cash flow after interest and expenses, adjusted for small swings in interest receivable and payables. Per-unit figures use members' capital as a proxy for units because weighted unit counts are not reported in the data we use. On that basis earnings were about 6 to 8 cents per unit in 2017 to 2021, roughly 5.3 cents in 2022 to 2024, and 3.2 cents in 2025. Net income fell from $3.4 million to $1.8 million in 2025 because the loan book shrank by about $18.8 million on average (fewer loans met lending standards while redemption requests of about $25.8 million were pending), and a $335 thousand provision was booked on two loans where collateral values fell. Earnings in the first half of 2026 ($1.3 million of net income) are running above the 2025 pace, but we do not treat that as a new level yet. Starting point. We use about 4.5 cents per unit a year, between the 2025 low and the 2022 to 2024 level, because the loan book is still shrinking and $21.5 million of loans (37% of principal, eleven loans) are behind on payments or past maturity, including some with loan-to-value above 100%. Returns from the fund only compound if capital is re-lent at similar yields, and the shrinking book shows that is not currently happening. Base case: about $0.75 per unit. Income continues at roughly 4.5 cents a unit with no growth credited, since we can point to no contracted or repeatable source of growth. Earnings of 4.5 cents against a 6% required return values a unit at 75 cents, below its roughly 95 cents of book capital because the fund's costs and non-earning loans hold its return under the required rate. Bear case: about $0.45. The delinquent loans resolve poorly, 2025's 3.2 cent earnings level persists, and further collateral shortfalls reduce capital. This is built only from the disclosed arrears, the two collateral-dependent loans already provisioned, and the ongoing decline in loan volume. Bull case: about $0.90. Delinquent loans are resolved near book value, earnings return to the 5.3 to 5.5 cent level of 2022 to 2024, and the fund holds that level. We cap this near book capital because we can name no lever that would push earnings above levels already achieved. What would make this wrong. Recoveries on the eleven delinquent loans could be far better or worse than assumed; a sharp fall in Bay Area commercial real-estate values would push toward the bear case; and the manager's discretion over fees and redemptions can change what unit holders actually receive. Because units cannot be sold in a market, the practical value to a holder also depends on being able to redeem.