8-KMaterial AgreementsFinancial EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Jun 26, 2019)

Filed June 26, 2019For Securities:DHI

Summary

D.R. Horton, Inc. (DHI), through its subsidiary DHI Mortgage Company, Ltd., has entered into the Eighth Amendment to its Second Amended and Restated Master Repurchase Agreement. This amendment, effective June 21, 2019, is a material definitive agreement that significantly impacts the company's financing and liquidity arrangements. The core of this amendment is the increase in the maximum aggregate commitment amount under the repurchase facility, a crucial mechanism for DHI Mortgage to finance its operations by transferring eligible loans to buyers in exchange for funds. The primary takeaway for investors is the enhancement of DHI Mortgage's borrowing capacity. The facility's maximum commitment has been raised to $900 million, with provisions for temporary increases to $1.1 billion at fiscal quarter ends. Furthermore, the "accordion" feature has been expanded, allowing for potential access to up to $1.2 billion in commitments, subject to securing additional or new buyer participation. This increased financial flexibility is designed to support DHI Mortgage's ongoing business activities and potentially manage seasonal fluctuations in its financing needs.

Key Highlights

  • 1DHI Mortgage Company, Ltd. entered into the Eighth Amendment to its Master Repurchase Agreement on June 21, 2019.
  • 2The amendment increases the maximum aggregate commitment amount under the repurchase facility from its previous level to $900 million.
  • 3Temporary increases to $1.1 billion are permitted for approximately 30 days at the end of the Seller's third fiscal quarter and 45 days at the end of the Seller's fourth fiscal quarter.
  • 4The "accordion" feature has been increased, allowing for a potential maximum aggregate commitment of $1.2 billion, contingent on securing additional lender commitments.
  • 5The repurchase facility provides DHI Mortgage with financing and liquidity by facilitating the purchase of eligible loans.
  • 6The amendment also increases the "Wet Loans Sublimit" within the facility.
  • 7Amounts outstanding under this facility are not guaranteed by the parent company, D.R. Horton, Inc., or its homebuilding debt guarantors.

Frequently Asked Questions

The Eighth Amendment's primary purpose is to increase the financial flexibility and borrowing capacity of DHI Mortgage Company, Ltd. It does this by raising the maximum aggregate commitment amount available under its repurchase facility, which is used to finance the purchase of eligible loans.

The maximum aggregate commitment amount is increased to $900 million. Additionally, there are provisions for temporary increases to $1.1 billion during specific fiscal quarter-end periods, and the facility's "accordion" feature allows for a potential maximum of $1.2 billion if additional commitments are secured.

No, the filing explicitly states that amounts outstanding under the Amended Repurchase Facility are not guaranteed by D.R. Horton, Inc. or any of its subsidiaries that guarantee homebuilding debt. This means the obligation resides with DHI Mortgage Company, Ltd.

An increase in the "Wet Loans Sublimit" suggests that DHI Mortgage has more capacity to finance "wet loans" (loans that are not yet fully processed or closed but have been funded) within the overall repurchase facility. This can provide greater flexibility in managing its loan origination and funding pipeline.