Loans Payable, Senior Notes and Mortgage Company Loan Facility

3 Months Ended

Jan. 31, 2021

Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At January 31, 2021 and October 31, 2020, loans payable consisted of the following (amounts in thousands):


	January 31, 2021		October 31, 2020
Senior unsecured term loan	$	650,000	$	800,000

Loans payable – other	324,140		351,257
Deferred issuance costs	(2,636)		(3,302)
	$	971,504	$	1,147,955

Senior Unsecured Term Loan

We have a five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks that is scheduled to expire on November 1, 2025. Prior to January 28, 2021, the principal amount outstanding under the Term Loan Facility was $800.0 million. On January 28, 2021, we voluntarily repaid $150.0 million of the Term Loan Facility, and the remaining $650.0 million principal amount outstanding will become due and payable at maturity on November 1, 2025. No prepayment charges were incurred in connection with the repayment. At January 31, 2021, the interest rate on borrowings was 1.18% 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 Revolving Credit Facility described below.

In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility through October 2025. The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility, which was 1.05% as of January 31, 2021. These interest rate swaps were designated as cash flow hedges.

Revolving Credit Facility

We have a $1.905 billion, five-year senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. On October 31, 2020, we entered into extension letter agreements which extended the maturity date of $1.85 billion of the revolving loans and commitments under the Revolving Credit Facility from November 1, 2024 to November 1, 2025, with the remainder of the revolving loans and commitments continuing to terminate on November 1, 2024. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Revolving Credit Facility.

Under the terms of the Revolving Credit Facility, at January 31, 2021, our maximum leverage ratio, as defined, may not exceed 1.75 to 1.00, and we are required to maintain a minimum tangible net worth, as defined, of no less than approximately $2.10 billion. Under the terms of the Revolving Credit Facility, at January 31, 2021, our leverage ratio was approximately 0.57 to

1.00, and our tangible net worth was approximately $4.72 billion. Based upon the limitations related to our repurchase of common stock in the Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $3.66 billion as of January 31, 2021. In addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $2.62 billion as of January 31, 2021.

At January 31, 2021, we had no outstanding borrowings under the Revolving Credit Facility and had approximately $120.2 million of outstanding letters of credit that were issued under the Revolving Credit Facility. At January 31, 2021, the interest rate on borrowings under the Revolving Credit Facility would have been 1.32% per annum.

Loans Payable – Other

“Loans payable – other” primarily represents purchase money mortgages on properties we 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. At January 31, 2021, the weighted-average interest rate on “Loans payable – other” was 4.35% per annum.

Senior Notes

At January 31, 2021, we had seven issues of senior notes outstanding with an aggregate principal amount of $2.66 billion.

In our first quarter of fiscal 2021, we redeemed, prior to maturity, approximately $10.0 million of the $419.9 million then-outstanding principal amount of 5.875% Senior Notes due February 15, 2022, at par, plus accrued interest.

Subsequent event

In February 2021, we delivered notice to the holders of our outstanding 5.625% Senior Notes due 2024 that we intend to redeem, prior to maturity, all $250.0 million aggregate principal amount of such notes on March 15, 2021. In connection with this redemption, we expect to incur a pre-tax charge of approximately $34.0 million in our second quarter of fiscal 2021.

Mortgage Company Loan Facility

In October 2017, TBI Mortgage® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, entered into a mortgage warehousing agreement (the “Warehousing Agreement”) with a bank to finance the origination of mortgage loans by TBI Mortgage. The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” In December 2018, the Warehousing Agreement was amended to provide for loan purchases up to $75.0 million, subject to certain sublimits. In addition, the Warehousing Agreement, as amended, 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 $150.0 million for a short period of time. The Warehousing Agreement, as amended, expired on March 4, 2021, and borrowings thereunder bore interest at LIBOR plus 1.90% per annum. At January 31, 2021, the interest rate on the Warehousing Agreement, as amended, was 2.02% per annum. In March 2021, the Warehousing Agreement was amended and restated to extend the expiration date to March 3, 2022 and borrowings thereunder will bear interest at LIBOR (with a LIBOR floor of 0.75%) plus 1.75% per annum.