Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At October 31, 2016 and 2015, loans payable consisted of the following (amounts in thousands):



	2016			2015
Senior unsecured term loan	$	500,000		$	500,000
Credit facility borrowings	250,000			350,000
Loans payable – other	122,809			151,702
Deferred issuance costs	(1,730		)	(1,263		)
	$	871,079		$	1,000,439

Senior Unsecured Term Loan

On February 3, 2014, we entered into a five-year, $485.0 million, unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks. We borrowed the full amount of the Term Loan Facility on February 3, 2014. In October 2014, we increased the Term Loan Facility by $15.0 million and borrowed the full amount of the increase.

On May 19, 2016, we entered into an amendment to the Term Loan Facility to, among other things, (1) amend the financial maintenance covenants therein to be substantially the same as the financial maintenance covenants applicable under the New Credit Facility described below and (2) revise certain provisions relating to the interest rate applicable on outstanding borrowings. In addition, in August 2016, we amended the Term Loan Facility to extend the maturity date from February 3, 2019 to August 2, 2021.

Under the Term Loan Facility, as amended, we may select interest rates equal to (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin, (ii) the base rate (as defined in the agreement) plus an applicable margin, or (iii) the federal funds/Euro rate (as defined in the agreement) plus an applicable margin, in each case, based on our leverage ratio. At October 31, 2016, the interest rate on the Term Loan Facility was 1.93% 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, as described below.

Credit Facility

On August 1, 2013, we entered into a $1.035 billion unsecured, five-year revolving credit facility (“Credit Facility”). The commitments under the Credit Facility were scheduled to expire on August 1, 2018. On May 19, 2016, we entered into a new $1.215 billion (subsequently increased to $1.295 billion) (the “Aggregate Credit Commitment”), unsecured, five-year revolving credit facility (the “New Credit Facility”) with a syndicate of banks and terminated the Credit Facility. The commitments under the New Credit Facility are scheduled to expire on May 19, 2021. Up to 50% of the Aggregate Credit Commitment is available for letters of credit. The New Credit Facility has an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the New Credit Facility up to a maximum aggregate amount of $2.0 billion. We may select interest rates for the New Credit Facility equal to (i) 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, 2016, the interest rate on outstanding borrowings under the New Credit Facility was 2.03% 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 New Credit Facility may be used for general corporate purposes. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the New Credit Facility.

Under the terms of the New 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 agreement) of no less than approximately $2.60 billion. Under the terms of the New Credit Facility, at October 31, 2016, our leverage ratio was approximately 0.71 to 1.00 and our tangible net worth was approximately $4.18 billion. Based upon the minimum tangible net worth requirement, our ability to repurchase our common stock was limited to approximately $2.13 billion as of October 31, 2016.

At October 31, 2016, we had $250.0 million of outstanding borrowings under the New Credit Facility and had outstanding letters of credit of approximately $83.2 million.

Loans Payable – Other

Our “Loans payable – other” primarily 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 our behalf to finance community infrastructure and our manufacturing facilities. Information regarding our loans payable at October 31, 2016 and 2015, is included in the table below ($ amounts in thousands):



	2016			2015
Aggregate loans payable at October 31	$	122,809		$	151,702
Weighted-average interest rate	3.99		%	3.78		%
Interest rate range	0.78% - 7.87%			0.15% - 7.87%
Loans secured by assets
Carrying value of loans secured by assets	$	122,570		$	151,702
Carrying value of assets securing loans	$	461,162		$	378,864

The contractual maturities of “Loans payable – other” as of October 31, 2016, ranged from three months to 30 years.

Senior Notes

At October 31, 2016 and 2015, senior notes consisted of the following (amounts in thousands):



	2016			2015
8.91% Senior Notes due October 15, 2017	$	400,000		$	400,000
4.00% Senior Notes due December 31, 2018	350,000			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			250,000
4.875% Senior Notes due November 15, 2025	350,000			350,000
0.5% Exchangeable Senior Notes due September 15, 2032	287,500			287,500
Bond discount and deferred issuance costs	(13,004		)	(17,575		)
	$	2,694,372		$	2,689,801

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 New Credit Facility and the Term Loan 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% Exchangeable 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% Exchangeable Senior Notes are not redeemable by us prior to September 15, 2017. The 0.5% Exchangeable 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% Exchangeable Senior Notes are exchanged, we would issue approximately 5.9 million shares of our common stock. Shares issuable upon conversion of the 0.5% Exchangeable Senior Notes are included in the calculation of diluted earnings per share. Holders of the 0.5% Exchangeable Senior Notes 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 October 2015, we issued $350.0 million aggregate principal amount of 4.875% Senior Notes due 2025 (the “4.875% Senior Notes”) at par. We received $347.7 million of net proceeds from this issuance of 4.875% Senior Notes.

In May 2015, we repaid, at maturity, the $300.0 million of then-outstanding principal amount of 5.15% Senior Notes due May 15, 2015.

In March 2014, we repaid, at maturity, the $268.0 million of the then-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.

Mortgage Company Loan Facility

In October 2016, TBI Mortgage^® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, entered into a Mortgage Warehousing Agreement (“Warehousing Agreement”) with a syndicate of banks. The purpose of the Warehousing Agreement is to finance the origination of mortgage loans by TBI Mortgage, and the Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” The Warehousing Agreement provides for loan purchases up to $150 million, subject to certain sublimits. In addition, the Warehousing Agreement provides for an accordion feature under which TBI Mortgage may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $210 million for a short period of time. The Warehousing Agreement, expires on October 27, 2017, and borrowings thereunder bear interest at LIBOR plus 2.00% per annum. At October 31, 2016, the interest rate on the Warehousing Agreement was 2.53% per annum. In addition, we are subject to an under usage fee based on outstanding balances, as defined in the Warehousing Agreement. Borrowings under this facility are included in the fiscal 2017 maturities.

Prior to entering into the Warehousing Agreement, TBI Mortgage had a Master Repurchase Agreement, as amended (the “Repurchase Agreement”) with a bank, which provided for loan purchases up to $85 million subject to certain sublimits. In addition, the Repurchase Agreement provided for an accordion feature under which TBI Mortgage could request that the aggregate commitments under the Repurchase Agreement be increased to an amount up to $125 million for a short period of time. The borrowings under the Repurchase Agreement bore interest at LIBOR plus 2.00% per annum, with a minimum rate of 2.00%. The Repurchase Agreement was terminated when we entered into the Warehousing Agreement.

At October 31, 2016 and 2015, there were $210.0 million and $100.0 million, respectively, outstanding under the Warehousing and Repurchase Agreements, respectively, which are included in liabilities in our Consolidated Balance Sheets. At October 31, 2016 and 2015, amounts outstanding under the agreements were collateralized by $231.4 million and $115.9 million, respectively, of mortgage loans held for sale, which are included in assets in our Consolidated Balance Sheets. As of October 31, 2016, there were no aggregate outstanding purchase price limitations reducing the amount available to TBI Mortgage. There are several restrictions on purchased loans under the agreements, 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 agreements.

General

As of October 31, 2016, the annual aggregate maturities of our loans and notes during each of the next five fiscal years are as follows (amounts in thousands):



	Amount
2017	$	637,329
2018 (a)	$	305,543
2019	$	373,122
2020	$	253,914
2021	$	751,983


(a)	Since the Holders of the 0.5% Exchangeable Senior Notes have the right to require Toll Brothers Finance Corp. to repurchase their notes on December 15, 2017, these notes are included as a fiscal 2018 maturity.