Debt | 3 Months Ended |
Mar. 31, 2015 |
Debt Disclosure [Abstract] | |
Debt | 9. DEBT |
|
| | | | | | | | | | | | | | |
(Dollars in thousands) | | As of | | | As of | | | | | | | |
March 31, 2015 | December 31, 2014 | | | | | | |
7.75% Senior Notes due 2020, unsecured, with $8.5 million and $8.9 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively and $3.3 million and $3.4 million of unamortized bond premium at March 31, 2015 and December 31, 2014, respectively | | $ | 488,676 | | | $ | 488,840 | | | | | | | |
5.25% Senior Notes due 2021, unsecured, with $7.2 million and $7.5 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively | | | 550,000 | | | | 550,000 | | | | | | | |
5.625% Senior Notes due 2024, unsecured, with $4.8 million and $4.9 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively | | | 350,000 | | | | 350,000 | | | | | | | |
| | | | | | | | | | | | | | |
Senior Notes sub-total | | $ | 1,388,676 | | | $ | 1,388,840 | | | | | | | |
$400 million Revolving Credit Facility with $5.0 million and $5.6 million of unamortized debt issuance costs at March 31, 2015 and December 31, 2014, respectively | | | — | | | | 40,000 | | | | | | | |
Mortgage warehouse borrowings | | | 55,245 | | | | 160,750 | | | | | | | |
Loans payable and other borrowings | | | 128,184 | | | | 147,516 | | | | | | | |
| | | | | | | | | | | | | | |
Total Senior Notes and bank financing | | $ | 1,572,105 | | | $ | 1,737,106 | | | | | | | |
| | | | | | | | | | | | | | |
2020 Senior Notes |
On April 13, 2012, we issued $550.0 million of 7.75% Senior Notes due 2020 (the “Initial Notes”) at an initial offering price of 100% of the principal amount (the “Offering”). The net proceeds from the sale of the Initial Notes were used, in part, to repay existing indebtedness. The remaining proceeds of approximately $187.4 million from the Offering were used for general corporate purposes. An additional $3.0 million of issuance costs were incurred. |
On August 21, 2012, we issued an additional $125.0 million of 7.75% Senior Notes due 2020 (the “Additional Notes” together with the Initial Notes, the “2020 Senior Notes”) at an initial offering price of 105.5% of the principal amount. The net proceeds were used for general corporate purposes. The Additional Notes issued August 21, 2012 were issued pursuant to the existing indenture for the 2020 Senior Notes. The 2020 Senior Notes are unsecured and not subject to registration rights. |
On April 12, 2013, we used $204.3 million of the net proceeds of the IPO to acquire New TMM Units from New TMM (at a price equal to the price paid by the underwriters for shares of Class A Common Stock in the IPO). TMM Holdings used these proceeds to repay a portion of the 2020 Senior Notes. |
Obligations to pay principal and interest on the 2020 Senior Notes are guaranteed by TMM Holdings, Taylor Morrison Holdings, Inc., Taylor Morrison Communities II, Inc. and the U.S. homebuilding subsidiaries of TMC (collectively, the “Guarantors”). The 2020 Senior Notes and the guarantees are senior unsecured obligations. The indenture for the 2020 Senior Notes contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate transactions, (vi) the incurrence of liens, (vii) the incurrence of prohibitions on payments and asset transfers among the issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2020 Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within specified deadlines, we will be required to offer to repurchase the 2020 Senior Notes at par (plus accrued and unpaid interest) with such proceeds. The 2020 Senior Notes were redeemed in full on May 1, 2015 using the net proceeds from an issuance of new senior unsecured notes, together with cash on hand. For further information, see Note 18 – Subsequent Events. |
There are no financial maintenance covenants for the 2020 Senior Notes. |
2021 Senior Notes |
On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021 Senior Notes”). The 2021 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from the issuance of the 2021 Senior Notes were used to repay the outstanding balance under the Revolving Credit Facility and for general corporate purposes, including the purchase of additional land inventory. |
The 2021 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 Senior Notes. The indenture governing the 2021 Senior Notes contains covenants, change of control and asset sale offer provisions that are similar to those contained in the indenture governing the 2020 Senior Notes. |
There are no financial maintenance covenants for the 2021 Senior Notes. |
2024 Senior Notes |
On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024 Senior Notes”). The 2024 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from the issuance of the 2024 Senior Notes were used to repay the outstanding balance under the Revolving Credit Facility and for general corporate purposes. |
The 2024 Senior Notes mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 and 2021 Senior Notes. The 2024 Senior Notes and the guarantees are senior unsecured obligations. The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions. The indenture governing the 2024 Senior Notes contains events of default that are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change of control before the repurchase offer requirement is triggered for the 2024 Senior Notes. |
Prior to December 1, 2023, the 2024 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through December 1, 2023 (plus accrued and unpaid interest). Beginning on December 1, 2023, the 2024 Senior Notes are redeemable at par (plus accrued and unpaid interest). |
There are no financial maintenance covenants for the 2024 Senior Notes. |
Revolving Credit Facility |
The Revolving Credit Facility contains certain “springing” financial covenants, requiring TMM Holdings and its subsidiaries to comply with a certain maximum capitalization ratio and a certain minimum consolidated tangible net worth test. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the Revolving Credit Facility provides that TMC may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to its capital that will, upon the contribution of such cash to TMC, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall. The maximum debt to total capitalization ratio is 0.60 to 1.00. The ratio as calculated by Taylor Morrison Communities, Inc. (“TMC” or the “Borrower”) at March 31, 2015 was 0.38 to 1.00. The minimum consolidated tangible net worth requirement was $1.4 billion at March 31, 2015. At March 31, 2015, the Borrower’s tangible net worth, as defined in the Revolving Credit Facility, was $1.8 billion. |
The Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control. As of March 31, 2015, we were in compliance with all of the covenants under the Revolving Credit Facility. |
On April 24, 2015, we amended our senior revolving credit facility (the “Revolving Credit Facility”) to increase the amount available thereunder to $500.0 million, extend its maturity to April 12, 2019 and reduce certain margins payable thereunder. For more information, see Note 18 – Subsequent Events. |
Mortgage Borrowings |
The following is a summary of our mortgage subsidiary borrowings (in thousands): |
|
| | | | | | | | | | | | | | |
| | As of March 31, 2015 |
Facility | | Amount Drawn | | | Facility Amount | | | Interest Rate | | Expiration Date | | Collateral (1) |
Flagstar | | $ | 22,995 | | | $ | 85,000 | | | LIBOR + 2.5% | | 30 days written notice | | Mortgage Loans |
Comerica | | | — | | | | 50,000 | | | LIBOR + 2.75% | | 19-Aug-15 | | Mortgage Loans |
J.P. Morgan | | | 32,250 | | | | 50,000 | | | -2 | | 28-Sep-15 | | Pledged Cash |
| | | | | | | | | | | | | | |
Total | | $ | 55,245 | | | $ | 185,000 | | | | | | | |
| | | | | | | | | | | | | | |
| |
| | As of December 31, 2014 |
Facility | | Amount Drawn | | | Facility Amount | | | Interest Rate | | Expiration Date | | Collateral (1) |
Flagstar | | $ | 62,894 | | | $ | 85,000 | | | LIBOR + 2.5% | | 30 days written notice | | Mortgage Loans |
Comerica | | | 11,430 | | | | 50,000 | | | LIBOR + 2.75% | | 19-Aug-15 | | Mortgage Loans |
J.P. Morgan | | | 86,426 | | | | 100,000 | (3) | | -2 | | 28-Sep-15 | | Pledged Cash |
| | | | | | | | | | | | | | |
Total | | $ | 160,750 | | | $ | 235,000 | | | | | | | |
| | | | | | | | | | | | | | |
|
(1) | The mortgage borrowings outstanding as of March 31, 2015 and December 31, 2014, are collateralized by $83.4 million and $191.1 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage receivables and $0.6 million and $1.3 million, respectively, of restricted short-term investments which are included in restricted cash in the accompanying Condensed Consolidated Balance Sheets. | | | | | | | | | | | | | |
(2) | Interest under the J.P. Morgan agreement ranges from 2.50% plus 30-day LIBOR to 2.875% plus 30-day LIBOR or 0.25% (whichever is greater). | | | | | | | | | | | | | |
(3) | The warehouse facility with J.P. Morgan has a maximum credit line of $50.0 million. On December 12, 2014 the agreement was temporarily amended to increase the capacity from $50.0 million to $100.0 million. Effective January 23, 2015, the temporary increase expired. | | | | | | | | | | | | | |
Loans Payable and Other Borrowings |
Loans payable and other borrowings as of March 31, 2015 and December 31, 2014 consist of amounts due to various land sellers and a seller carryback note from a prior year acquisition. Loans payable bear interest at rates that ranged from 0% to 8% at March 31, 2015 and December 31, 2014, and generally are secured by the land that was acquired with the loans. We impute interest for loans with no stated interest rates. |