8-KMaterial AgreementsFinancial EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (May 21, 2020)

Filed May 21, 2020For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) announced on May 21, 2020, through its subsidiary DHI Mortgage Company, Ltd., the execution of the Tenth Amendment to their Second Amended and Restated Master Repurchase Agreement. This amendment is a significant development for the company's financing and liquidity, particularly for its mortgage subsidiary. The key takeaway for investors is the substantial increase in the aggregate commitment amount under the Amended Repurchase Facility. This facility provides crucial financing by allowing DHI Mortgage to transfer eligible loans to buyers in exchange for funds. The amendment raises the standard maximum commitment to $1.35 billion, with provisions for even higher amounts ($1.575 billion) during specific fiscal periods and a potential to reach $1.8 billion through additional buyer commitments. This enhanced borrowing capacity is designed to support DHI Mortgage's operations and its ability to originate and manage loans, which is vital in the housing market.

Key Highlights

  • 1DHI Mortgage Company, Ltd. entered into the Tenth Amendment to its Master Repurchase Agreement effective May 15, 2020.
  • 2The maximum aggregate commitment amount under the Amended Repurchase Facility has been increased to $1.35 billion.
  • 3The facility allows for temporary increases up to $1.575 billion during specific fiscal periods (end of fiscal Q3 2020, Q1 2021, and fiscal year 2020).
  • 4An 'accordion feature' allows for a potential maximum aggregate commitment of $1.8 billion, subject to obtaining increased commitments from existing or new buyers.
  • 5The financing facility is crucial for DHI Mortgage to obtain liquidity by transferring eligible loans to buyers.
  • 6The Tenth Amendment introduces a one-month LIBOR Rate minimum of 0.75%.
  • 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 Master Repurchase Agreement, as amended, provides DHI Mortgage Company, Ltd. with a crucial source of financing and liquidity. It allows DHI Mortgage to transfer eligible loans to buyers (in exchange for funds) on a short-term basis, effectively using its loan portfolio as collateral to generate working capital.

The Tenth Amendment significantly increases D.R. Horton's borrowing capacity through its mortgage subsidiary. The standard maximum commitment is raised to $1.35 billion, with flexibility for higher amounts during key fiscal periods and potential to reach $1.8 billion. This provides greater financial flexibility for DHI Mortgage's operations.

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 credit risk for this specific facility rests primarily with DHI Mortgage Company, Ltd.

The establishment of a one-month LIBOR Rate minimum of 0.75% means that the cost of borrowing under this facility will not fall below this rate, even if market rates are lower. This could potentially increase financing costs if LIBOR is at or near the minimum, compared to a facility without such a floor.