Lennar Corp. has remade its $390 million "B" piece by reducing the amount to $300 million, extending the maturity and locking in one of the lowest interest rates ever for an institutional tranche. The company was opportunistic in its bid to revamp the facility, looking for the right window in terms of market pricing, said Waynewright Malcolm, Lennar v.p. and treasurer.
When that window opened, Lennar's new investment grade ratings and its stronger results helped the company secure LIBOR plus 13/4% pricing, down from a spread of 21/2% over LIBOR. "We've had some pretty strong results over the last couple of years," said Malcolm. The maturity on the piece was also extended from May 2007 until December 2008. While the company reduced the amount on its "B" piece, its overall debt has increased due to an issue of 5.95% senior notes due 2013 in January, he noted. A portion of the notes was used to pay down the "B" piece and some of the company's mortgage financing notes.
With $926 million available between its four-year and 364-day revolvers and $700 million of cash, the company has ample liquidity, Malcolm said. Holding the large amount of liquidity is a part of Lennar's business model. As homebuilders, the company needs to finance all its construction and land development from its balance sheet, he said. Deutsche Bank and Bank One lead the credit. Bank One also holds the lead on the company's revolvers.