Loans Payable, Senior Notes and Mortgage Company Loan Facility

3 Months Ended

Jan. 31, 2019

Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At January 31, 2019 and October 31, 2018, loans payable consisted of the following (amounts in thousands):



	January 31, 2019			October 31, 2018
Senior unsecured term loan	$	800,000		$	500,000
Loans payable – other	203,623			188,115
Deferred issuance costs	(3,156		)	(1,314		)
	$	1,000,467		$	686,801

Senior Unsecured Term Loan

At January 31, 2019, we had an $800.0 million, five-year senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks. 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. At January 31, 2019, the interest rate on borrowings was 3.81% per annum. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Term Loan Facility.

Under the terms of the Term Loan Facility, at January 31, 2019, 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 $2.71 billion. Under the terms of the Term Loan Facility, at January 31, 2019, our leverage ratio was approximately 0.60 to 1.00, and our tangible net worth was approximately $4.78 billion. Based upon the limitations related to our repurchase of common stock in the Term Loan Facility, our ability to repurchase our common stock was limited to approximately $3.28 billion as of January 31, 2019. In addition, our ability to pay cash dividends was limited to approximately $2.10 billion as of January 31, 2019.

Credit Facility

We have a $1.295 billion, five-year senior unsecured revolving credit facility (the “Credit Facility”) with a syndicate of banks. The Credit Facility is scheduled to expire in May 2021. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Credit Facility.

Under the terms of the Credit Facility, at January 31, 2019, 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 $2.53 billion. Under the terms of the Credit Facility, at January 31, 2019, our leverage ratio was approximately 0.60 to 1.00, and our tangible

net worth was approximately $4.78 billion. Based upon the limitations related to our repurchase of common stock in the Credit Facility, our ability to repurchase our common stock was limited to approximately $2.94 billion as of January 31, 2019. In addition, under the provisions of the Credit Facility, our ability to pay cash dividends was limited to approximately $2.25 billion as of January 31, 2019.

At January 31, 2019, we had no outstanding borrowings under the Credit Facility and had approximately $174.4 million of outstanding letters of credit that were issued under the Credit Facility. At January 31, 2019, the interest rate on borrowings under the Credit Facility would have been 4.01% per annum.

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. At January 31, 2019, the weighted-average interest rate on “Loans payable – other” was 4.87% per annum.

Senior Notes

At January 31, 2019, we had seven issues of senior notes outstanding with an aggregate principal amount of $2.52 billion. In January 2018, we issued $400.0 million principal amount of 4.350% Senior Notes due 2028. We received $396.4 million of net proceeds from the issuance of these senior notes. 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 (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 again 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, expires on December 6, 2019, and borrowings thereunder bear interest at LIBOR plus 1.90% per annum. At January 31, 2019, the interest rate on the Warehousing Agreement, as amended, was 4.41% per annum.

Prior to the December 2018 amendment, the Warehousing Agreement was operating pursuant to the December 2017 amendment which had substantially similar terms to the December 2018 amendment.