Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At October 31, 2014 and 2013, loans payable consisted of the following (amounts in thousands):



	2014		2013
Senior unsecured term loan	$	500,000
Loans payable - other	154,261		$	107,222
	$	654,261	$	107,222

Credit Facility

On August 1, 2013, we entered into a $1.035 billion unsecured, five-year revolving credit facility (“Credit Facility”) with a syndicate of 15 banks (“Aggregate Credit Commitment”), which extends to August 1, 2018. Up to 75% of the Aggregate Credit Commitment is available for letters of credit. The Credit Facility has an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Credit Facility up to a maximum aggregate amount of $2.0 billion. We may select interest rates for the Credit Facility equal to (i) the London Interbank Offering Rate (“LIBOR”) plus an applicable margin or (ii) the lenders’ base rate plus an applicable margin, which in each case is based on our credit rating and leverage ratio. At October 31, 2014, the interest rate on outstanding borrowings under the Credit Facility would have been 2.10% per annum. We are obligated to pay an undrawn commitment fee that is based on the average daily unused amount of the Aggregate Credit Commitment and our credit ratings and leverage ratio. Any proceeds from borrowings under the Credit Facility may be used for general corporate purposes. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Credit Facility.

Under the terms of the Credit Facility, our maximum leverage ratio (as defined in the Credit Agreement) may not exceed 1.75 to 1.00 and we are required to maintain a minimum tangible net worth (as defined in the Credit Facility) of no less than approximately $2.48 billion. Under the terms of the Credit Facility, at October 31, 2014, our leverage ratio was approximately 0.71 to 1.00 and our tangible net worth was approximately $3.80 billion. Based upon the minimum tangible net worth requirement, our ability to repurchase our common stock was limited to approximately $1.74 billion as of October 31, 2014.

The Credit Facility replaced our revolving credit facility entered into as of October 22, 2010 (the “2010 Facility”). Upon entering into the Credit Facility, we voluntarily terminated the 2010 Facility on August 1, 2013. No early termination penalties were incurred by us as a result of the termination of the 2010 Facility.

At October 31, 2014, we had no borrowings outstanding under the Credit Facility and had outstanding letters of credit of approximately $94.8 million. As part of the Acquisition, we borrowed $370.0 million under the Credit Facility on February 3, 2014, all of which had been repaid as of October 31, 2014.

Senior Unsecured Term Loan

On February 3, 2014, we entered into a 5-year senior, $485.0 million, unsecured term loan facility (the “Term Loan Facility”) with a syndicate of 10 banks. We borrowed the full amount of the Term Loan Facility on February 3, 2014. In October 2014, we added an additional lender to the Term Loan Facility and increased the Term Loan Facility by $15.0 million. We drew down the $15.0 million from the facility in October 2014.

We may select interest rates for the Term Loan Facility equal to (i) LIBOR plus an applicable margin, (ii) the base rate (which is defined as the greatest of (a) SunTrust Bank’s prime rate, (b) the federal funds effective rate plus 0.5%, and (c) one-month LIBOR plus 1%) plus an applicable margin, or (iii) the federal funds/Euro rate (which is defined as the greater of (a) the sum of the federal funds effective rate plus an applicable margin plus 0.25%, and (b) one-month LIBOR), with the applicable margin, in each case, based on our leverage ratio. At October 31, 2014, the interest rate on the Term Loan Facility was 1.81% per annum.

We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as the Credit Facility. The Term Loan Facility will mature, and amounts owing thereunder will become due and payable, on February 3, 2019.

364-Day Senior Unsecured Revolving Credit Facility

On February 4, 2014, we entered into a 364-day senior unsecured revolving credit facility (the “364-Day Facility”) with five banks. The 364-Day Facility provided for an unsecured revolving credit facility to be made available to us until February 3, 2015 in the amount of $500.0 million. The 364-Day Facility allowed us to select interest rates for the 364-Day Facility equal to (i) LIBOR plus an applicable margin, (ii) the base rate (which is defined as the greatest of (a) Citibank’s prime rate, (b) the federal funds effective rate plus 0.5%, and (c) one-month LIBOR plus 1%) plus an applicable margin, or (iii) the federal funds/Euro rate (which is defined as the greater of (a) the sum of the federal funds effective rate plus an applicable margin plus 0.25%, and (b) one-month LIBOR), with the applicable margin, in each case, based on our leverage ratio. We were obligated to pay an undrawn commitment fee.

We and substantially all of our 100%-owned home building subsidiaries were guarantors under the 364-Day Facility. The 364-Day Facility contained substantially the same financial covenants as the Credit Facility.

In October 2014, we voluntarily terminated the 364-Day Facility. No amounts were ever borrowed under the 364-Day Facility.

Loans Payable - Other

Our loans payable - other represent purchase money mortgages on properties we had acquired that the seller had financed and various revenue bonds that were issued by government entities on behalf of us to finance community infrastructure and our manufacturing facilities. Information regarding our loans payable at October 31, 2014 and 2013, is included in the table below ($ amounts in thousands):



	2014			2013
Aggregate loans payable at October 31	$	154,261		$	107,222
Weighted-average interest rate	4.34		%	4.53		%
Interest rate range	0.15% - 7.87%			0.14% - 7.87%
Loans secured by assets
Carrying value of loans secured by assets	$	154,111		$	106,358
Carrying value of assets securing loans	$	428,122		$	372,833

The contractual maturities of loans payable - other as of October 31, 2014, ranged from less than one month to 32 years.

Senior Notes

At October 31, 2014 and 2013, senior notes consisted of the following (amounts in thousands):



	2014			2013
4.95% Senior Notes due March 15, 2014	$	—		$	267,960
5.15% Senior Notes due May 15, 2015	300,000			300,000
8.91% Senior Notes due October 15, 2017	400,000			400,000
4.00% Senior Notes due December 31, 2018	350,000			—
6.75% Senior Notes due November 1, 2019	250,000			250,000
5.875% Senior Notes due February 15, 2022	419,876			419,876
4.375% Senior Notes due April 15, 2023	400,000			400,000
5.625% Senior Notes due January 15, 2024	250,000			—
0.5% Exchangeable Senior Notes due September 15, 2032	287,500			287,500
Bond discount	(2,332		)	(3,894		)
	$	2,655,044		$	2,321,442

The senior notes are the unsecured obligations of Toll Brothers Finance Corp., our 100%-owned subsidiary. The payment of principal and interest is fully and unconditionally guaranteed, jointly and severally, by us and substantially all of our 100%-owned home building subsidiaries (together with Toll Brothers Finance Corp., the “Senior Note Parties”). The senior notes rank equally in right of payment with all the Senior Note Parties’ existing and future unsecured senior indebtedness, including the Credit Facility. The senior notes are structurally subordinated to the prior claims of creditors, including trade creditors, of our subsidiaries that are not guarantors of the senior notes. The senior notes, other than the 0.5% Exchangeable Senior Notes due 2032 (“0.5% Senior Notes”), are redeemable in whole or in part at any time at our option, at prices that vary based upon the then-current rates of interest and the remaining original term of the notes. The 0.5% Senior Notes are not redeemable by us prior to September 15, 2017.

In March 2014, we repaid the $268.0 million of outstanding principal amount of 4.95% Senior Notes due March 15, 2014.

In November 2013, we issued $350.0 million aggregate principal amount of 4.0% Senior Notes due 2018 (the “4.0% Senior Notes”) and $250.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “5.625% Senior Notes”). We received $596.2 million of net proceeds from the issuance of the 4.0% Senior Notes and the 5.625% Senior Notes.

In September 2013, we repaid the outstanding principal amount of $104.8 million of our 5.95% Senior Notes due September 15, 2013.

In April 2013, we issued $300.0 million aggregate principal amount of 4.375% Senior Notes due 2023 (the “4.375% Senior Notes”) at par. We received $298.1 million of net proceeds from this issuance of 4.375% Senior Notes.

In May 2013, we issued an additional $100.0 million aggregate principal amount of 4.375% Senior Notes at a price equal to 103% of par value. We received $102.3 million of net proceeds from this additional issuance of 4.375% Senior Notes.

In November 2012, we repaid the $59.1 million of outstanding principal amount of 6.875% Senior Notes due November 15, 2012.

In September 2012, we issued $287.5 million aggregate principal amount of 0.5% Senior Notes. We received $282.5 million of net proceeds from the issuance of the 0.5% Senior Notes. The 0.5% Senior Notes are exchangeable into shares of our common stock at an exchange rate of 20.3749 shares per $1,000 principal amount of notes, corresponding to an initial exchange price of approximately $49.08 per share of common stock. If all of the 0.5% Senior Notes are exchanged, we would issue approximately 5.9 million shares of our common stock. Shares issuable upon conversion of the 0.5% Senior Notes are included in the calculation of diluted earnings per share. See Note 11, “Income Per Share Information,” for more information regarding the number of shares included in the calculation of diluted earnings per share. Holders of the 0.5% Senior Notes will have the right to require Toll Brothers Finance Corp. to repurchase their notes for cash equal to 100% of their principal amount, plus accrued but unpaid interest, on each of December 15, 2017; September 15, 2022; and September 15, 2027. Toll Brothers Finance Corp. will have the right to redeem the 0.5% Senior Notes on or after September 15, 2017, for cash equal to 100% of their principal amount, plus accrued but unpaid interest.

In February 2012, we issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “5.875% Senior Notes”). We received $296.2 million of net proceeds from the issuance of the 5.875% Senior Notes. In March 2012, we issued an additional $119.9 million aggregate principal amount of our 5.875% Senior Notes in exchange for $80.7 million principal amount of our 6.875% Senior Notes due 2012 and $36.9 million principal amount of our 5.95% Senior Notes due 2013. We recognized a charge of $1.2 million in fiscal 2012 representing the aggregate costs associated with the exchange of both series of notes; these expenses are included in “Selling, general and administrative” expense in the Consolidated Statements of Operations and Comprehensive Income.

Mortgage Company Loan Facility

In July 2014, TBI Mortgage^® Company (“TBI Mortgage”), our wholly-owned mortgage subsidiary, amended its Master Repurchase Agreement (the “Repurchase Agreement”) with Comerica Bank. The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by TBI Mortgage, and the Repurchase Agreement is accounted for as a secured borrowing under ASC 860. The Repurchase Agreement, as amended, provides for loan purchases up to $50 million, subject to certain sublimits. In addition, the Repurchase Agreement provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Repurchase Agreement be increased to an amount up to $100 million for a short period of time. The Repurchase Agreement, as amended, expires on July 21, 2015, and bears interest at LIBOR plus 2.00%, with a minimum rate of 2.00%. Borrowings under this facility are included in the fiscal 2014 maturities.

At October 31, 2014 and 2013, there were $90.3 million and $75.0 million, respectively, outstanding under the Repurchase Agreement, which are included in liabilities in the accompanying Consolidated Balance Sheets. At October 31, 2014 and 2013, amounts outstanding under the Repurchase Agreement were collateralized by $93.9 million and $113.5 million, respectively, of mortgage loans held for sale, which are included in assets in our Consolidated Balance Sheets. As of October 31, 2014, there were no aggregate outstanding purchase price limitations reducing the amount available to TBI Mortgage. There are several restrictions on purchased loans under the Repurchase Agreement, including that they cannot be sold to others, they cannot be pledged to anyone other than the agent, and they cannot support any other borrowing or repurchase agreement.

General

As of October 31, 2014, the annual aggregate maturities of our loans and notes during each of the next five fiscal years are as follows (amounts in thousands):



	Amount
2015	$	455,382
2016	$	25,528
2017	$	407,932
2018	$	4,890
2019	$	858,808