DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

Total debt consists of the following (in thousands):

	As of
	June 30, 2022						December 31, 2021
	Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value		Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value
5.875% Senior Notes due 2023	$	350,000	$	(449)	$	349,551	$	350,000	$	(733)	$	349,267
5.625% Senior Notes due 2024	350,000		(897)		349,103		350,000		(1,166)		348,834
5.875% Senior Notes due 2027	500,000		(3,851)		496,149		500,000		(4,243)		495,757
6.625% Senior Notes due 2027	35,889		1,928		37,817		300,000		17,718		317,718
5.75% Senior Notes due 2028	450,000		(3,498)		446,502		450,000		(3,814)		446,186
5.125% Senior Notes due 2030	500,000		(5,124)		494,876		500,000		(5,440)		494,560
Senior Notes subtotal	$	2,185,889	$	(11,891)	$	2,173,998	$	2,450,000	$	2,322	$	2,452,322
Loans payable and other borrowings	447,191		—		447,191		404,386		—		404,386
$800 Million Revolving Credit Facility(1)	150,000		—		150,000		—		—		—
$100 Million Revolving Credit Facility(1)	—		—		—		31,529		—		31,529
Mortgage warehouse borrowings	179,555		—		179,555		413,887		—		413,887
Total debt	$	2,962,635	$	(11,891)	$	2,950,744	$	3,299,802	$	2,322	$	3,302,124

(1)The $800 Million Revolving Credit Agreement together with the $100 Million Revolving Credit Agreement, the “Credit Facilities”

Debt Instruments

Excluding the debt instruments discussed below, the terms governing all other debt instruments listed in the table above have not substantially changed from the year ended December 31, 2021. For information regarding such instruments, refer to Note 8 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021. As of June 30, 2022, we were in compliance with all of the covenants in the debt instruments listed in the table above.

6.625% Senior Notes due 2027

Following our exchange offer in the first quarter of 2020 (the “Exchange Offer”), whereby Taylor Morrison Communities, Inc (“TM Communities”) offered to exchange any and all outstanding senior notes issued by William Lyon Homes (“WLH”), we had $290.4 million aggregate principal amount of 6.625% Senior Notes due 2027 issued by TM Communities (the “2027 6.625% TM Communities Notes”) and $9.6 million aggregate principal amount of 6.625% Senior Notes due 2027 issued by WLH (the “2027 6.625% WLH Notes” and together with the 2027 6.625% TM Communities Notes, the “2027 6.625% Senior Notes”). The 2027 6.625% TM Communities Notes are obligations of TM Communities and are guaranteed by Taylor Morrison Home III Corporation, Taylor Morrison Holdings, Inc. and their homebuilding subsidiaries (collectively, the “Guarantors”).

In connection with the consummation of the Exchange Offer, WLH entered into a supplemental indenture to eliminate substantially all of the covenants in the indenture governing the 2027 6.625% WLH Notes, including the requirements to offer to purchase such notes upon a change of control, and to eliminate certain other restrictive provisions and events that constitute an “Event of Default” in such indenture.

On June 13, 2022, TM Communities announced a cash tender offer to purchase any and all of the $290.4 million outstanding aggregate principal amount of the 2027 6.625% TM Communities Notes (the “Tender Offer”), which expired July 12, 2022. As of June 30, 2022, TM Communities had purchased $264.1 million of the 2027 6.625% TM Communities Notes pursuant to the Tender Offer using cash on hand and borrowings on our $800 Million Revolving Credit Facility at a price equal to 100% of the principal amount, plus accrued and unpaid interest up to, but excluding, the settlement date. As a result of the Tender Offer, we recorded a total net gain on extinguishment of debt of approximately $13.5 million on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022. Subsequent to quarter end, TM Communities repurchased an additional $0.8 million of the 2027 6.625% TM Communities Notes at a price equal to 97% of the principal amount, resulting in a total of $265.0 million in aggregate principal amount of outstanding 2027 6.625% TM Communities Notes being repurchased pursuant to the Tender Offer.

In connection with the Tender Offer, TM Communities also solicited consents from holders of the 2027 6.625% TM Communities Notes to amend the indenture governing such notes to, among other things, eliminate substantially all of the restrictive covenants of the indenture (the “Proposed Amendments”). As of June 27, 2022, TM Communities had received the requisite consents to effect the Proposed Amendments and, as a result, a supplemental indenture was executed to effect the Proposed Amendments, which became effective on June 29, 2022.

The remaining 2027 6.625% Senior Notes mature on July 15, 2027. Prior to July 15, 2022, the remaining 2027 6.625% Senior Notes were redeemable in whole or in part at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, and accrued and unpaid interest, if any, to, but not including, the redemption date. On or after July 15, 2022, the remaining 2027 6.625% Senior Notes are redeemable at a price equal to 103.313% of principal (plus accrued and unpaid interest). On or after July 15, 2023, the 2027 6.625% Senior Notes are redeemable at a price equal to 102.208% of principal (plus accrued and unpaid interest). On or after July 31, 2024, the 2027 6.625% Senior Notes are redeemable at a price equal to a 101.104% of principal (plus accrued and unpaid interest). On or after July 15, 2025, the remaining 2027 6.625% Senior Notes are redeemable at a price equal to 100% of principal (plus accrued and unpaid interest).

$800 Million Revolving Credit Facility

On March 11, 2022, we amended our $800 Million Revolving Credit Facility, which extends the maturity date from February 6, 2024 to March 11, 2027 and includes reduced pricing upon meeting lower capitalization ratios. The facility remains guaranteed by the Guarantors.

In connection with our Tender Offer, we have borrowed $150.0 million under our $800 Million Revolving Credit Facility which remained outstanding as of June 30, 2022. We had no outstanding borrowings as of December 31, 2021.

As of June 30, 2022 and December 31, 2021, we had $3.0 million and $1.1 million, respectively, of unamortized debt issuance costs relating to our $800 Million Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the Condensed Consolidated Balance Sheets. As of June 30, 2022 and December 31, 2021, we had $66.3 million and $58.7 million, respectively, of utilized letters of credit, resulting in $583.7 million and $741.3 million, respectively, of availability under the $800 Million Revolving Credit Facility.

The $800 Million Revolving Credit Facility contains certain “springing” financial covenants, requiring us and our subsidiaries to comply with a maximum debt to capitalization ratio of not more than 0.60 to 1.00 and a minimum consolidated tangible net worth level of at least $2.5 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $800 Million Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the $800 Million Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the $800 Million Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the $800 Million Revolving Credit Facility provides that we may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to our capital that will, upon the contribution of such cash to the borrower, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall.

The $800 Million Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, the payment of dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The $800 Million Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control.

As of June 30, 2022, we were in compliance with all of the covenants under the $800 Million Revolving Credit Facility.

Mortgage Warehouse Borrowings

The following is a summary of our mortgage warehouse borrowings (in thousands):

	As of June 30, 2022
Facility	Amount Drawn		Facility Amount		Interest Rate(1)	Expiration Date	Collateral (2)
Warehouse A	$	4,538	$	10,000	LIBOR + 1.75%	On Demand	Mortgage Loans
Warehouse B	20,143		75,000		LIBOR + 1.75%	On Demand	Mortgage Loans
Warehouse C	43,170		125,000		LIBOR + 1.95%	On Demand	Mortgage Loans and Restricted Cash
Warehouse D	52,733		100,000		LIBOR + 1.65%	November 20, 2022	Mortgage Loans
Warehouse E	58,971		100,000		LIBOR + 1.50%	On Demand	Mortgage Loans
Total	$	179,555	$	410,000
	As of December 31, 2021
Facility	Amount Drawn		Facility Amount		Interest Rate(1)	Expiration Date	Collateral (2)
Warehouse A	$	12	$	10,000	LIBOR + 1.75%	On Demand	Mortgage Loans
Warehouse B	86,409		150,000		LIBOR + 1.75%	On Demand	Mortgage Loans
Warehouse C	116,601		250,000		LIBOR + 2.05%	On Demand	Mortgage Loans and Restricted Cash
Warehouse D	105,065		150,000		LIBOR + 1.65%	November 20, 2022	Mortgage Loans
Warehouse E	105,800		200,000		LIBOR + 1.50%	On Demand	Mortgage Loans
Total	$	413,887	$	760,000

(1) Subject to certain interest rate floors.

(2) The mortgage warehouse borrowings outstanding as of June 30, 2022 and December 31, 2021 were collateralized by $203.2 million and $467.5 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage loans held for sale, and approximately $0.9 million and $3.5 million, respectively, of cash which is restricted cash on our Condensed Consolidated Balance Sheet.

Loans Payable and Other Borrowings

Loans payable and other borrowings as of June 30, 2022 and December 31, 2021 consist of project-level debt due to various land sellers and financial institutions for specific projects. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot closings or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0% to 8% at each of June 30, 2022 and December 31, 2021.