Loans Payable, Senior Notes and Mortgage Company Loan Facility

3 Months Ended

Jan. 31, 2022

Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At January 31, 2022 and October 31, 2021, loans payable consisted of the following (amounts in thousands):


	January 31, 2022		October 31, 2021
Senior unsecured term loan	$	650,000	$	650,000

Loans payable – other	495,624		364,042
Deferred issuance costs	(2,376)		(2,508)
	$	1,143,248	$	1,011,534

Senior Unsecured Term Loan

We are party to a $650.0 million senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks, most of which is scheduled to expire on November 1, 2026. In the first quarter of fiscal 2021, we voluntarily repaid $150.0 million of the then $800.0 million in principal amount that was outstanding. No prepayment charges were incurred in connection with the repayment. On October 31, 2021, we entered into term loan extension agreements to extend the maturity date of $548.4 million of outstanding term loans from November 1, 2025 to November 1, 2026, with the remainder of the term loans remaining due November 1, 2025. Other than $101.6 million of term loans that are scheduled to mature on November 1, 2025, there are no payments required before the final maturity date on the Term Loan Facility. At January 31, 2022, the interest rate on the Term Loan Facility was 1.16% 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, 2022. These interest rate swaps were designated as cash flow hedges.

Revolving Credit Facility

We have a $1.905 billion, senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. On October 31, 2021, we entered into extension letter agreements which extended the maturity date of $1.78 billion of the revolving loans and commitments under the Revolving Credit Facility from November 1, 2025 to November 1, 2026, with the remainder of the revolving loans and commitments continuing to terminate on November 1, 2025. 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, 2022, 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 $2.09 billion. Under the terms of the Revolving Credit Facility, at January 31, 2022, our leverage ratio was approximately 0.44 to 1.00, and our tangible net worth was approximately $5.25 billion. Based upon the terms of the Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $4.26 billion as of January 31, 2022. In addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $3.16 billion as of January 31, 2022.

At January 31, 2022, we had no outstanding borrowings under the Revolving Credit Facility and had approximately $92.9 million of outstanding letters of credit that were issued under the Revolving Credit Facility. At January 31, 2022, the interest rate on outstanding borrowings under the Revolving Credit Facility would have been 1.31% per annum. In February 2022, we borrowed $200.0 million under our Revolving Credit Facility.

Loans Payable – Other

“Loans payable – other” primarily represents purchase money mortgages on properties we acquired that the seller had financed, project-level financing, and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our manufacturing facilities. At January 31, 2022, the weighted-average interest rate on “Loans payable – other” was 3.80% per annum.

Senior Notes

At January 31, 2022, we had five issues of senior notes outstanding with an aggregate principal amount of $2.00 billion.

In our first quarter of fiscal 2022, we redeemed the remaining $409.9 million principal amount of 5.875% Senior Notes due February 15, 2022, at par, plus accrued interest.

Mortgage Company Loan Facility

Toll Brothers Mortgage Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, has a mortgage warehousing agreement (the “Warehousing Agreement”) with a bank, which has been amended from time to time, 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.” The Warehousing Agreement provides for loan purchases up to $75.0 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 $150.0 million for a short period of time. Prior to its scheduled expiration on March 4, 2021, the Warehousing Agreement was amended and restated to extend the expiration date to March 3, 2022 and to reduce the interest rate thereunder to LIBOR plus 1.75% per annum (with a LIBOR floor of 0.75%). Prior to the extension, borrowings under the facility bore interest at LIBOR plus 1.90% per annum. At January 31, 2022, the interest rate on the Warehousing Agreement, as amended, was 2.50% per annum. Subsequent to January 31, 2022, the Warehousing Agreement was further extended to April 2, 2022.