Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At October 31, 2018 and 2017, loans payable consisted of the following (amounts in thousands):



	2018			2017
Senior unsecured term loan	$	500,000		$	500,000
Loans payable – other	188,115			139,116
Deferred issuance costs	(1,314		)	(1,700		)
	$	686,801		$	637,416

Senior Unsecured Term Loan

At October 31, 2018, we had a $500.0 million, five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks that was scheduled to mature in August 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, 2018, the interest rate on the Term Loan Facility was 3.70% 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, as described below.

Subsequent event

On November 1, 2018, we entered into an amendment to the Term Loan Facility to, among other things, (i) increase the size of the outstanding term loan to $800.0 million; (ii) extend the maturity date to November 1, 2023, with no principal payments being required before the maturity date; (iii) provide an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Term Loan Facility up to a maximum aggregate amount of $1.0 billion; (iv) revise certain provisions to reduce the interest rate applicable on outstanding borrowings; and (v) modify certain provisions relating to existing financial maintenance and negative covenants.

Revolving Credit Facility

We have a $1.295 billion senior unsecured, five-year revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. The commitments under the Revolving Credit Facility are scheduled to expire on May 19, 2021. Up to 50% of the commitment is available for letters of credit. The Revolving Credit Facility has an accordion feature under which we may, subject to certain conditions set forth in the agreement, increase the Revolving Credit Facility up to a maximum aggregate amount of $2.0 billion. We may select interest rates for the Revolving 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, 2018, the interest rate on outstanding borrowings under the Revolving Credit Facility would have been 3.80% 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 Revolving Credit Facility may be used for general corporate purposes. 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 October 31, 2018, 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 $2.50 billion. Under the terms of the Revolving Credit Facility, at October 31, 2018, our leverage ratio was approximately 0.54 to 1.00 and our tangible net worth was approximately $4.72 billion. Based upon the 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 $2.41 billion as of October 31, 2018. In addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $2.22 billion as of October 31, 2018.

At October 31, 2018, we had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of approximately $165.4 million.

Loans Payable – Other

“Loans payable – other” primarily represent 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. Information regarding our loans payable at October 31, 2018 and 2017, is included in the table below ($ amounts in thousands):



	2018			2017
Aggregate loans payable at October 31	$	188,115		$	139,116
Weighted-average interest rate	4.68		%	4.11		%
Interest rate range	1.15% - 7.87%			1.11% - 7.87%
Loans secured by assets
Carrying value of loans secured by assets	$	152,281		$	139,116
Carrying value of assets securing loans	$	467,164		$	483,910

The contractual maturities of “Loans payable – other” as of October 31, 2018, ranged from two months to 28 years.

Senior Notes

At October 31, 2018 and 2017, senior notes consisted of the following (amounts in thousands):



	2018			2017
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
4.875% Senior Notes due March 15, 2027	450,000			450,000
4.35% Senior Notes due February 15, 2028	400,000			—
Bond discounts, premiums, and deferred issuance costs, net	(8,501		)	(7,413		)
	$	2,861,375		$	2,462,463

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 Revolving 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. Each series of senior notes is 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 senior notes to be redeemed.

In January 2018, we issued $400.0 million aggregate principal amount of 4.350% Senior Notes due 2028. The Company received $396.4 million of net proceeds from the issuance of these senior notes.

In October 2017, we repaid, at maturity, the $400.0 million of then-outstanding principal amount of 8.91% Senior Notes due October 15, 2017.

On September 15, 2017, we redeemed all $287.5 million aggregate principal amount of the 0.5% Exchangeable Senior Notes for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest. The 0.5% Exchangeable Senior Notes were 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 were exchanged, we would have issued approximately 5.9 million shares of our common stock. Shares issuable upon conversion of the 0.5% Exchangeable Senior Notes were included in the calculation of diluted earnings per share.

In March 2017, we issued $300.0 million aggregate principal amount of 4.875% Senior Notes due 2027 (“4.875% Senior Notes due 2027”). The Company received $297.2 million of net proceeds from the issuance of these senior notes. In June 2017, we issued an additional $150.0 million principal amount of the 4.875% Senior Notes due 2027. These additional notes were issued at a premium of 103.655% of principal plus accrued interest. We received $156.4 million of net proceeds from the issuance of these additional notes.

Subsequent event

On November 30, 2018, we redeemed, prior to maturity, the $350.0 million of then-outstanding principal amount of 4.00% Senior Notes due December 31, 2018, at par, plus accrued interest.

Mortgage Company Loan Facility

In October 2017, TBI Mortgage^® Company (“TBI Mortgage”), our wholly owned mortgage subsidiary, entered into a mortgage warehousing agreement (“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 2017, the Warehousing Agreement was amended to provide for loan purchases up to $75.0 million, subject to certain sublimits. Prior to this amendment, the Warehousing Agreement provided for loan purchases up to $100.0 million. 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, expires on December 6, 2018, and borrowings thereunder bear interest at LIBOR plus 1.90% per annum. At October 31, 2018, the interest rate on the Warehousing Agreement was 4.21% 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 2019 maturities.

At October 31, 2018 and 2017, there were $150.0 million and $120.1 million, respectively, outstanding under the Warehousing Agreement, which are included in liabilities in our Consolidated Balance Sheets. At October 31, 2018 and 2017, amounts outstanding under the agreement were collateralized by $163.2 million and $125.7 million, respectively, of mortgage loans held for sale, which are included in assets in our Consolidated Balance Sheets. As of October 31, 2018, there were no aggregate outstanding purchase price limitations reducing the amount available to TBI Mortgage. There are several restrictions on purchased loans under the agreement, 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.

Subsequent event

In December 2018, TBI Mortgage amended the Warehousing Agreement. As amended, the Warehousing Agreement provides for loan purchases up to $75.0 million, expires on December 6, 2019, and 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. Borrowings will bear interest at LIBOR plus 1.90% per annum.

General

As of October 31, 2018, the annual aggregate maturities of our loans and notes during each of the next five fiscal years are as follows (amounts in thousands):



	Amount
2019	$	572,488
2020	$	259,455
2021	$	509,281
2022	$	430,391
2023	$	409,947