Lennar Homebuilding Senior Notes and Other Debts Payable

6 Months Ended

May 31, 2017

Lennar Homebuilding Senior Notes and Other Debts Payable



(Dollars in thousands)	May 31, 2017		November 30, 2016
4.75% senior notes due December 2017	398,851		398,479
6.95% senior notes due 2018	248,905		248,474
4.125% senior notes due December 2018	274,174		273,889
4.500% senior notes due 2019	498,397		498,002
4.50% senior notes due 2019	597,899		597,474
4.750% senior notes due 2021	496,938		496,547
6.875% senior notes due 2021 (1)	260,157		—
4.125% senior notes due 2022	595,514		—
4.750% senior notes due 2022	568,944		568,404
4.875% senior notes due December 2023	394,567		394,170
4.500% senior notes due 2024	645,113		—
4.750% senior notes due 2025	496,449		496,226
12.25% senior notes due 2017	—		398,232
Mortgage notes on land and other debt	291,781		206,080
	$	5,767,689	4,575,977


(1)	The Company became a co-borrower with regard to the 6.875% senior notes due 2021 (the "6.875% Senior Notes") as a result of the WCI acquisition. The 6.875% Senior Notes were recorded at fair value with a principal outstanding amount of $249.8 million and are callable at declining premiums until maturity.

The carrying amounts of the senior notes listed above are net of debt issuance costs of $28.1 million and $22.1 million, as of May 31, 2017 and November 30, 2016, respectively.

In May 2017, the Company amended the credit agreement governing its unsecured revolving credit facility (the "Credit Facility") to increase the maximum borrowings from $1.8 billion to $2.0 billion and extend the maturity on $1.4 billion of the Credit Facility from June 2020 to June 2022, with $160 million maturing in June 2018 and the remaining $50 million maturing in June 2020. As of May 31, 2017, the Credit Facility included a $403 million accordion feature, subject to additional commitments. The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The credit agreement also provides that up to $500 million in commitments may be used for letters of credit. Under the Credit Facility agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. The Company believes it was in compliance with its debt covenants at May 31, 2017. In addition, the Company had $330 million of letter of credit facilities with different financial institutions.

The Company’s performance letters of credit outstanding were $318.7 million and $270.8 million, respectively, at May 31, 2017 and November 30, 2016. The Company’s financial letters of credit outstanding were $144.3 million and $210.3 million, at May 31, 2017 and November 30, 2016, respectively. Performance letters of credit are generally posted with regulatory bodies to guarantee the Company’s performance of certain development and construction activities. Financial letters of credit are generally posted in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at May 31, 2017, the Company had outstanding surety bonds of $1.2 billion including performance surety bonds related to site improvements at various projects (including certain projects in the Company’s joint ventures) and financial surety bonds. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all development and construction activities are completed. As of May 31, 2017, there were approximately $575.4 million, or 48%, of anticipated future costs to complete related to these site improvements. The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

In January 2017, the Company issued $600 million aggregate principal amount of 4.125% senior notes due 2022 (the "4.125% Senior Notes") at a price of 100%. Proceeds from the offering, after payment of expenses, were $595.2 million. The Company used the net proceeds from the sales of the 4.125% Senior Notes to fund a portion of the cash consideration for the Company's acquisition of WCI and to pay for costs and expenses related to this acquisition as well as for general corporate purposes. Interest on the 4.125% Senior Notes is due semi-annually beginning July 15, 2017. The 4.125% Senior Notes are unsecured and unsubordinated, but are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries.

In April 2017, the Company issued $650 million aggregate principal amount of 4.50% senior notes due 2024 (the "4.50% Senior Notes") at a price of 100%. Proceeds from the offering, after payment of expenses, were $645.0 million. The Company used a portion of the net proceeds from the sales of the 4.50% Senior Notes for the retirement of its 12.25% senior notes due 2017 for 100% of the $400 million outstanding principal amount, plus accrued and unpaid interest. The Company intends to use the balance of the net proceeds together with cash on hand for general corporate purposes, which may include the redemption of its 6.875% senior notes due 2021. Interest on the 4.50% Senior Notes is due semi-annually beginning October 30, 2017. The 4.50% Senior Notes are unsecured and unsubordinated, but are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries.

The Company's senior notes are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries and some of the Company's other subsidiaries. Although the guarantees are full, unconditional and joint and several while they are in effect, (i) a subsidiary will cease to be a guarantor at any time when it is not directly or indirectly guaranteeing at least $75 million of debt of Lennar Corporation (the parent company), and (ii) a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.