Homebuilding company, D.R. Horton, Inc. (DHI) recently announced the pricing of senior notes worth $500 million. The senior notes carry an annual interest rate of 3.750% which will be paid semi-annually and will mature on Mar 1, 2019. The company intends to close the offering of senior notes on Feb 24. The net proceeds from the senior notes will be used for general corporate expenses.
In a separate press release, D.R. Horton announced that it intends to offer senior notes worth $400 million due 2019. The net proceeds are to be used for general corporate purposes.
D.R. Horton is one of the largest homebuilders in the U.S. The company’s homebuilding cash & cash equivalents totaled $801.1 million as of Dec 31, 2013. In the first quarter 2014, D.R. Horton invested $467 million in lots, land and development. As of Dec 31, 2013, the company owned 126,000 lots and controlled 49,000 lots through option contracts. The present issue of senior notes will further enhance the company’s ability to invest in strengthening its inventory.
As the housing market continues to gain momentum with increasing housing demand, the company is well positioned in the upcoming spring selling season, given its strong supply of finished lots and homes in inventory. The company’s weekly sales pace also picked up momentum in January, driven by increasing housing demand.
D.R. Horton currently carries a Zacks Rank #1 (Strong Buy). Investors interested in the homebuilding sector can also consider stocks like William Lyon Homes (WLH), Taylor Morrison Home Corporation (TMHC) and Lennar Corp. (LEN). While William Lyon and Taylor Morrison sport a Zacks Rank #1, Lennar carries a Zacks Rank #2 (Buy).
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