Convertible Senior Notes

9 Months Ended

Sep. 30, 2019

Warehouse Credit Facilities—To provide capital for the mortgage loans that it originates, Redfin Mortgage, the Company's wholly owned mortgage origination subsidiary, utilizes warehouse credit facilities that are classified as current liabilities in the Company's condensed consolidated balance sheets. The following table summarizes borrowings under these facilities as of the periods presented:



Lender	Borrowing Capacity as of September 30, 2019		Borrowings as of September 30, 2019		Borrowings as of December 31, 2018
Western Alliance Bank	$	24,500	$	11,522	$	1,141
Texas Capital Bank, N.A.	24,500		10,465		3,592
Total	$	49,000	$	21,987	$	4,733

Borrowings under the facility with Western Alliance Bank ("Western Alliance") mature on June 15, 2020 and generally bear interest at a rate equal to the greater of (i) one-month LIBOR plus 2.00% or (ii) 3.50%. The agreement governing the facility requires Redfin Mortgage to maintain certain financial covenants. Redfin Mortgage is in default of this facility because it failed to satisfy a financial covenant as of September 30, 2019, but Western Alliance has not enforced its remedy under the agreement of requiring Redfin Mortgage to repurchase all outstanding loans held by the lender.

Borrowings under the facility with Texas Capital Bank, N.A. ("Texas Capital") mature on May 6, 2020 and generally bear interest at a rate equal to the greater of (i) the rate of interest accruing on the outstanding principal balance of the loan minus 0.5% or (ii) 3.5%. Due to Redfin Mortgage's failure to satisfy a financial covenant under the Western Alliance facility, it is in default of the Texas Capital facility. However, Texas Capital has not enforced its remedies under the agreement, which principally include the rights to (i) cease purchasing participation interests in loans from Redfin Mortgage and (ii) sell all interests of Texas

Capital or Redfin Mortgage in any loan subject to the agreement. Redfin Corporation has guaranteed Redfin Mortgage’s obligations under the agreement.

Secured Revolving Credit Facility—To provide capital for the properties that it purchases, RedfinNow, the Company's subsidiary that buys homes directly from homeowners and resell them to homebuyers, has, through a special purpose entity ("SPE"), entered into a secured revolving credit facility with Goldman Sachs Bank USA. The following table summarizes borrowings under this facility as of the period presented:



Lender	Borrowing Capacity as of September 30, 2019		Borrowings as of September 30, 2019
Goldman Sachs Bank USA	$	100,000	$	—

The facility matures on January 26, 2021, but the Company may extend the maturity date for an additional six months to repay outstanding borrowings. Borrowings under the facility generally bear interest at a rate of one-month LIBOR (subject to a floor of 0.50%) plus 2.65%. In instances involving "bad acts," Redfin Corporation has guaranteed repayment of amounts owed under the facility, in some situations, and indemnification of certain expenses incurred, in other situations. For the three months ended September 30, 2019, the Company amortized $102 of the debt issuance costs.

Convertible Senior Notes—On July 23, 2018, the Company issued $143,750 aggregate principal amount of Notes. The Notes are senior, unsecured obligations of Redfin, and bear interest at a fixed rate of 1.75% per year, payable semi-annually in arrears on January 15 and July 15. The effective interest rate of the liability portion of the debt is 7.25%. The Notes mature on July 15, 2023, unless earlier repurchased, redeemed or converted. As of September 30, 2019, no conversion events have occurred. The Company will settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at its election. The Company has the ability, and intends, to settle any conversions solely in cash.

The Notes consisted of the following:



	September 30, 2019			December 31, 2018
Principal	$	143,750		$	143,750
Less: debt discount, net of amortization	(22,605		)	(26,636		)
Less: debt issuance costs, net of amortization	(2,987		)	(3,528		)
Net carrying amount of the Notes	$	118,158		$	113,586

The total estimated fair value of the Notes as of September 30, 2019 and December 31, 2018 was approximately $131,028 and $117,875, respectively, based on the closing trading price of the Notes on last day of trading for the period. The fair value has been classified as Level 2 within the fair value hierarchy given the limited trading activity of the Notes.

The following table sets forth total interest expense recognized related to the Notes for the periods presented:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Amortization of debt discount	$	1,359	$	997	$	4,031	$	997
Amortization of debt issuance costs	182		131		541		131
Total amortization of debt issuance costs and accretion of equity portion	1,541		1,128		4,572		1,128
Contractual interest expense	629		482		1,887		482
Total interest expense related to the Notes	$	2,170	$	1,610	$	6,459	$	1,610