Loans Payable, Senior Notes and Mortgage Company Loan Facility

6 Months Ended

Apr. 30, 2024

Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At April 30, 2024 and October 31, 2023, loans payable consisted of the following (amounts in thousands):


	April 30, 2024		October 31, 2023
Senior unsecured term loan	$	650,000	$	650,000

Loans payable – other	465,750		517,378
Deferred issuance costs	(2,624)		(3,154)
	$	1,113,126	$	1,164,224

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 of which $487.5 million matures February 14, 2028, $60.9 million matures on November 1, 2026 and the remaining $101.6 million matures on November 1, 2025. There are no payments required before these stated maturity dates. At April 30, 2024, the interest rate on the Term Loan Facility was 6.46% per annum. Toll Brothers, Inc. and substantially all of its 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. 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 through October 2025. The spread at April 30, 2024 was 1.15%. These interest rate swaps were designated as cash flow hedges.

Revolving Credit Facility

At April 30, 2024, we had a $1.905 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks that is scheduled to mature on February 14, 2028. The Revolving Credit Facility provides us with a committed borrowing capacity of $1.905 billion, which we have the ability to increase up to $3.00 billion with the consent of lenders. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility.

On May 2, 2024, we increased the aggregate committed borrowing capacity of our Revolving Credit Facility to $1.955 billion.

Under the terms of the Revolving Credit Facility, at April 30, 2024, our maximum leverage ratio, as defined, was not permitted to exceed 1.75 to 1.00, and we were required to maintain a minimum tangible net worth, as defined, of no less than approximately $4.11 billion. Under the terms of the Revolving Credit Facility, at April 30, 2024, our leverage ratio was approximately 0.28 to 1.00, and our tangible net worth was approximately $7.26 billion. Based upon the terms of the Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $3.93 billion as of April 30, 2024. In

addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $3.15 billion as of April 30, 2024.

At April 30, 2024, we had no outstanding borrowings under the Revolving Credit Facility and had approximately $170.0 million of outstanding letters of credit that were issued under the Revolving Credit Facility. At April 30, 2024, the interest rate on outstanding borrowings under the Revolving Credit Facility would have been 6.61% per annum.

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 April 30, 2024, the weighted-average interest rate on “Loans payable – other” was 5.58% per annum.

Senior Notes

At April 30, 2024, we had four issues of senior notes outstanding with an aggregate principal amount of $1.60 billion.

In our second quarter of fiscal 2023, we redeemed all $400.0 million principal amount of 4.375% Senior Notes due April 15, 2023, at par, plus accrued interest.

Mortgage Company Loan Facilities

Toll Brothers Mortgage Company (“TBMC”), our wholly owned mortgage subsidiary, had a mortgage warehousing agreement (the “Warehousing Agreement”) with a bank to finance the origination of mortgage loans by TBMC. The Warehousing Agreement was accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” The Warehousing Agreement provided for loan purchases up to $75.0 million, subject to certain sublimits. In addition, the Warehousing Agreement provided for an accordion feature under which TBMC could 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 under the Warehousing Agreement bore interest at BSBY plus 1.75% per annum (with a BSBY floor of 0.50%). The Warehousing Agreement was terminated in January 2024.

On December 5, 2023, TBMC executed a new Warehousing Agreement (“New Warehousing Agreement”) with a bank that provides for loan purchases up to $75.0 million, subject to certain sublimits. In addition, the New Warehousing Agreement, provides for an accordion feature under which TBMC may request that the aggregate commitments under the New Warehousing Agreement be increased to an amount up to $150.0 million for a short period of time. The New Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” TMBC is also subject to an under usage fee based on outstanding balances, as defined in the New Warehousing Agreement. The New Warehousing Agreement is set to expire on December 3, 2024 and bears interest at SOFR plus 1.75% per annum (with a SOFR floor of 2.50%). At April 30, 2024, the interest rate on the New Warehousing Agreement was 7.08% per annum.