Lennar Homebuilding Senior Notes and Other Debts Payable

3 Months Ended

Feb. 28, 2018

Lennar Homebuilding Senior Notes and Other Debts Payable



(Dollars in thousands)	February 28, 2018		November 30, 2017
Unsecured revolving credit facility	$	500,000	—
1.625% convertible senior notes due 2018 (1)	11,323		—
8.375% senior notes due 2018 (2)	582,032		—
6.95% senior notes due 2018	249,667		249,342
4.125% senior notes due December 2018	274,602		274,459
0.25% convertible senior notes due 2019 (1)	268,838		—
4.500% senior notes due 2019	498,968		498,793
4.50% senior notes due 2019	598,571		598,325
6.625% senior notes due 2020 (2)	318,171		—
2.95% senior notes due 2020	298,403		298,305
8.375% senior notes due 2021 (2)	449,464		—
4.750% senior notes due 2021	497,524		497,329
6.25% senior notes due December 2021 (2)	319,301		—
4.125% senior notes due 2022	596,152		595,904
5.375% senior notes due 2022 (2)	263,339		—
4.750% senior notes due 2022	569,645		569,484
4.875% senior notes due December 2023	395,265		394,964
4.500% senior notes due 2024	645,534		645,353
5.875% senior notes due 2024 (2)	456,569		—
4.750% senior notes due 2025	496,781		496,671
5.25% senior notes due 2026 (2)	410,115		—
5.00% senior notes due 2027 (2)	353,597		—
4.75% senior notes due 2027	892,706		892,657
Mortgage notes on land and other debt	435,973		398,417
	$	10,382,540	6,410,003

(1)

As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018), which is the amount included in the table above. In March 2018, holders of $6.7 million principal amount of CalAtlantic’s 1.625% convertible senior notes due 2018 and $266.2 million principal amount of CalAtlantic’s 0.25% convertible senior notes due 2019 either caused the Company to purchase them for cash or converted them into a combination of the Company’s Class A and Class B common stock and cash, resulting in the Company’s issuing approximately 3,654,000 shares of Class A common stock and 72,000 shares of Class B common stock, and paying $59.1 million in cash to former noteholders. All but $1.3 million of the convertible senior notes had either been converted or redeemed.

(2)

These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of Lennar Corporation as follows: $485.6 million principal amount of 8.375% Senior Notes due 2018, $267.7 million principal amount of 6.625% Senior Notes due 2020, $397.6 million principal amount of 8.375% Senior Notes due 2021, $292.0 million million principal amount of 6.25% Senior Notes due 2021, $240.8 million principal amount of 5.375% Senior Notes due 2022, $421.4 million principal amount of 5.875% Senior Notes due 2024, $395.5 million principal amount of 5.25% Senior Notes due 2026 and $347.3 million principal amount of 5.00% Senior Notes due 2027. As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).

The carrying amounts of the senior notes listed above are net of debt issuance costs of $38.6 million and $33.5 million, as of February 28, 2018 and November 30, 2017, respectively.

In February 2018, the Company amended the credit agreement governing its unsecured revolving credit facility (the "Credit Facility") to increase the maximum borrowings from $2.0 billion to $2.6 billion and extend the maturity on $2.1 billion of the Credit Facility from June 2022 to April 2023, with $70 million maturing in June 2018 and the remaining $50 million maturing in June 2020. As of February 28, 2018, the Credit Facility included a $420 million accordion feature, subject to additional commitments. Subsequent to February 28, 2018, an additional $175 million was committed to, reducing the accordion feature to $245 million. 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 February 28, 2018. In addition, the Company had $260 million of letter of credit facilities with different financial institutions.

The Company’s performance letters of credit outstanding were $471.0 million and $384.4 million, respectively, at February 28, 2018 and November 30, 2017. The Company’s financial letters of credit outstanding were $164.7 million and $127.4 million, at February 28, 2018 and November 30, 2017, 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 February 28, 2018, the Company had outstanding surety bonds of $2.4 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 February 28, 2018, there were approximately $1.2 billion, or 50%, 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.

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.