Huntingdon Valley, Pa.-based Toll Brothers increased its revolving credit facility and term loan with the aim of establishing a strategic relationship with three new banks, according to Joel Rassman, cfo. Rassman explained that the company needs to build relationships with various banks that can offer it different products and expertise as it always seeks to raise capital to grow its business. He said Toll Brothers will seek to secure about $150-200 million from the debt capital markets next year as it expects to grow 15% in revenues next year.
The builder of luxury homes and residential golf course communities added $80 million to its revolving credit facility, expanding the total to $615 million, and $15 million to its bank term loan facility, raising the total to $207.5 million. The three banks that participated in providing additional credit facilities were Washington Mutual Bank, The Norinchukin Bank and Commerce Bank. Rassman noted that Washington Mutual is a large provider of loans to residential buyers and has a construction-lending group that does project financing. The Norinchukin Bank will provide Toll Brothers access to sources of financing that are not tied to the U.S. economy. Commerce Bank is a local bank with strong knowledge of New Jersey, Pennsylvania and New York, which are Toll Brothers' major markets.
Rassman said the company got the same pricing -- LIBOR plus 95 basis points that it was carrying and kept the maturity of the loan at three-and-a-half years. The company also kept the same evergreen provision, allowing it to renew the facility early, which would be in a year-and-a-half. He said the pricing was fair for the company's investment grade rating of BBB- by Standard & Poor's, BBB by Fitch Ratings and Baa3 by Moody's Investors Service.