Lennar Ups Credit Facility Limit
Lennar Corporation (LEN) recently increased the limit under its unsecured revolving credit facility to $950 million. The company also extended its maturity to Jun 2017. The revised credit facility will improve the company’s liquidity position and contribute toward its long-term growth. The company previously had a credit facility of $525 million.
Earlier, on Apr 10, Lennar sold senior notes worth $50 million due on Nov 15, 2022 to initial purchasers, who in turn will resell the senior notes to qualified institutional buyers. The senior notes, which carry an interest rate of 4.75%, were sold at a price of 98.25% and generated total outstanding principal amount of $575 million. The principal amount were delivered and paid for on Apr 17, 2013.
Prior to this, Lennar had sold its senior notes due 2022 worth $175 million on Feb 4, 2013 and $350 million worth of notes on Oct 23, 2012.
Lennar intends to use the net proceeds for working capital and other corporate expenditures, which may include repurchase or repayment of its other outstanding senior notes or any other debt.
Most of the company’s short-term financing, such as expenses for land acquisition and development activities and other general operating needs are met with cash generated from operations and proceeds from debt issuances.
Lennar Corporation’s debt load remains high. Net homebuilding debt amounted to $3.39 billion as of Feb 28, 2013 versus $2.86 billion as of Nov 30, 2012, reflecting 370 basis points increase in net debt-to-capitalization ratio of 49.3%. Lennar had cash and cash equivalents of $1.11 billion from its homebuilding operations as of Feb 28, 2013 compared with $1.15 billion as of Nov 30, 2012.
Lennar carries a Zacks Rank #3 (Hold).
Other stocks in the homebuilding sector that are performing well and deserve a mention include D. R. Horton Inc. (DHI) and Ryland Group Inc. (RYL), both carrying a Zacks Rank #1 (Strong Buy), and MDC Holdings Inc. (MDC) carrying a Zacks Rank #2 (Buy).
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