DEBT AND NON-RECOURSE DEBT

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

DEBT AND NON-RECOURSE DEBT

DEBT AND NON-RECOURSE DEBT

Debt

The following table details our outstanding debt balance and its associated interest rates:

($ in millions)	March 31, 2024		December 31, 2023
Debt(1)
Senior secured credit facility
Term loan with a rate of 8.191%, due 2028	$	1,268	$	1,271
Term loan with a rate of 8.076%, due 2031	900		—
Revolver with a rate of 7.327%, due 2026	698		438
Senior notes with a rate of 5.000%, due 2029	850		850
Senior notes with a rate of 4.875%, due 2031	500		500
Senior notes with a rate of 6.625%, due 2032	900		—
Junior subordinated debentures	70		—
Other debt (4)	37		33
Total debt, gross	5,223		3,092
Less: unamortized deferred financing costs and discounts(2)(3)(5)	(79)		(43)
Total debt, net	$	5,144	$	3,049

(1)As of March 31, 2024 and December 31, 2023, weighted-average interest rates were 6.963% and 6.649%, respectively.

(2)Amount includes unamortized deferred financing costs related to our term loans and senior notes of $42 million and $27 million, respectively, as of March 31, 2024 and $21 million and $17 million, respectively, as of December 31, 2023. This amount also includes unamortized original issuance discounts of $7 million and $5 million as of March 31, 2024 and December 31, 2023, respectively.

(3)Amount does not include unamortized deferred financing costs of $3 million as of March 31, 2024 and December 31, 2023, respectively, related to our revolving facility which are included in Other assets in our unaudited condensed consolidated balance sheets.

(4)This amount includes $5 million related to the recourse portion on the NBA Receivables Facility, which is generally limited to the greater of 15% of the outstanding borrowings and $5 million, subject to certain exceptions.

(5)Amount also includes unamortized discount of $3 million related to the Bluegreen securitized debt recognized at the Bluegreen Acquisition Date.

Senior secured credit facility

On January 17, 2024, we entered into Amendment No. 4 (the “Amendment”) to the Credit Agreement and incurred $900 million of new term loan that will mature on January 17, 2031. Proceeds from the new term loans were used to pay the Bluegreen Acquisition consideration, fees and expenses incurred in connection with the Amendment and to refinance the repayment of certain indebtedness of Bluegreen and its subsidiaries.

As of March 31, 2024, we had $9 million of letters of credit outstanding under the revolving credit facility and $1 million outstanding backed by cash collateral. We were in compliance with all applicable maintenance and financial covenants and ratios as of March 31, 2024. As of March 31, 2024, we have $293 million remaining borrowing capacity under the revolver facility.

On April 8, 2024, we amended our Term Loan B under the Senior secured credit facility. Under the amendment, the new interest rate is SOFR plus 2.50%, down from SOFR plus 2.75%. The credit spread adjustment for the Term Loan B has been removed.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. These interest rate swaps are associated with the remaining available SOFR based senior secured credit facility. As of March 31, 2024, these interest rate swaps convert the SOFR-based variable rate on our Term Loan due 2028 to average fixed rates of 1.55% per annum with maturities between 2026 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps. As of March 31, 2024, the aggregate notional values of the interest rate swaps under our Term Loan due 2028 was $550 million. Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded at their estimated fair value as an asset in Other assets in our condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the estimated fair values of our cash flow hedges were $48 million and $42 million, respectively. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. We classify cash inflows and outflows from derivatives that hedge interest rate risk within operating activities in the unaudited condensed consolidated statements of cash flows.

The following table reflects the activity, net of tax, in Accumulated other comprehensive income related to our derivative instruments during the three months ended March 31, 2024:

	Net unrealized gain on derivative instruments
Balance as of December 31, 2023	$	32
Other comprehensive income before reclassifications, net	8
Reclassifications to net income	(4)
Balance as of March 31, 2024	$	36

Senior secured notes

On January 10, 2024, we completed an offering for $900 million aggregate principal amount of 6.625% senior secured notes due 2032 issued by our wholly-owned subsidiaries, Hilton Grand Vacations Borrower Escrow, LLC and Hilton Grand Vacations Borrower Escrow, Inc. Proceeds from the new secured notes were used to pay the Bluegreen Acquisition consideration, fees and expenses incurred in connection with the Amendment and to refinance the repayment of certain indebtedness of Bluegreen and its subsidiaries.

Senior Notes due 2032

The Senior Secured Notes are guaranteed on a senior secured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of March 31, 2024.

Senior Notes due 2029 and 2031

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of March 31, 2024.

Junior subordinated debentures

As part of the Bluegreen Acquisition, we assumed the junior subordinated debentures. As of March 31, 2024, we had $70 million of junior subordinated debentures outstanding, which we subsequently paid down in April 2024. The junior subordinated debentures bore interest at the three-month SOFR plus 0.26% and a margin of 3.80% to 4.90% and were scheduled to mature between 2035 and 2036.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and associated interest rates:

($ in millions)	March 31, 2024		December 31, 2023
Non-recourse debt(1)
Timeshare Facility with an average rate of 6.540%, due 2027(2)	$	290	$	400
Grand Islander Timeshare Facility with an average rate of 6.716%, due 2029	—		124
HGV Securitized Debt with a weighted average rate of 3.602%, due 2032	59		66
HGV Securitized Debt with a weighted average rate of 2.431%, due 2033	63		70
HGV Securitized Debt with a weighted average rate of 4.304%, due 2034	107		118
HGV Securitized Debt with a weighted average rate of 4.826%, due 2037	170		188
HGV Securitized Debt with a weighted average rate of 5.937%, due 2038	239		264
HGV Securitized Debt with a weighted average rate of 3.658%, due 2039	86		95
Grand Islander Securitized Debt with a weighted average rate of 2.965%, due 2029	—		15
Grand Islander Securitized Debt with a weighted average rate of 3.316%, due 2033	50		55
Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160%, due 2033	80		87
Bluegreen Securitized Debt with a weighted average rate of 3.354%, due 2031	7		—
Bluegreen Securitized Debt with a weighted average rate of 3.117%, due 2032	16		—
Bluegreen Securitized Debt with a weighted average rate of 4.019%, due 2034	24		—
Bluegreen Securitized Debt with a weighted average rate of 2.597%, due 2036	52		—
Bluegreen Securitized Debt with a weighted average rate of 4.599%, due 2037	106		—
Bluegreen Securitized Debt with a weighted average rate of 6.321%, due 2038	179		—
Quorum Purchase Facility with an average rate of 5.022%, due 2034	8		—
NBA Receivables Facility with an average rate of 7.240%, due 2031(5)	24		—
Total non-recourse debt, gross	1,560		1,482
Less: unamortized deferred financing costs and discount(3)(4)	(26)		(16)
Total non-recourse debt, net	$	1,534	$	1,466

(1)As of March 31, 2024 and December 31, 2023, weighted-average interest rates were 4.969% and 5.095%, respectively.

(2)The revolving commitment period of the Timeshare Facility terminates in March 2026; however, the repayment maturity date extends 12 months beyond the commitment termination date to March 2027.

(3)Amount relates to securitized debt only and does not include unamortized deferred financing costs of $4 million and $2 million as of March 31, 2024 and December 31, 2023, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets.

(4)Amount also includes unamortized discount of $3 million related to the Grand Islander securitized debt recognized at the Grand Islander Acquisition Date and unamortized discount of $13 million related to the Bluegreen securitized and non-recourse debt recognized at the Bluegreen Acquisition Date.

(5)Recourse on the NBA Receivables Facility is generally limited to the greater of 15% of the outstanding borrowings and $5.0 million, subject to certain exceptions.

The Timeshare Facility is a non-recourse obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. As of March 31, 2024, our Timeshare Facility has a remaining borrowing capacity of $460 million. In March 2024, we renewed our Timeshare Facility agreement under new terms, which include extending the commitment and maturity period to March 2026 and March 2027, respectively, and permitting to pledge as collateral certain timeshare loans associated to Grand Islander. On January 31, 2024, we terminated the Grand Islander Timeshare Facility. In connection with the Bluegreen Acquisition, we acquired an additional timeshare facility which was subsequently terminated in February 2024.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $62 million and $48 million as of March 31, 2024 and December 31, 2023, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of March 31, 2024 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2024 (remaining nine months)	$	90	$	255	$	345
2025	26		269		295
2026	722		222		944
2027	22		457		479
2028	1,238		123		1,361
Thereafter	3,125		235		3,360
Total	$	5,223	$	1,561	$	6,784