KB HOMEKBH
KB HOME Debt Disclosure
Notes Payable
Notes payable consisted of the following (in thousands):
November 30, | |||
2025 | 2024 | ||
Senior unsecured term loan due November 12, 2029 | $358,317 | $358,826 | |
6.875% Senior notes due June 15, 2027 | 299,096 | 298,560 | |
4.80% Senior notes due November 15, 2029 | 298,309 | 297,932 | |
7.25% Senior notes due July 15, 2030 | 347,084 | 346,574 | |
4.00% Senior notes due June 15, 2031 | 387,095 | 386,638 | |
Mortgages and land contracts due to land sellers and other loans (at an interest rate of 4.3% at November 30, 2025 and 2024) | 3,076 | 3,149 | |
Total | $1,692,977 | $1,691,679 | |
The carrying amounts of the Term Loan and senior notes listed above are net of debt issuance costs, which totaled $10.1
million at November 30, 2025 and $11.5 million at November 30, 2024.
Unsecured Revolving Credit Facility. On November 12, 2025, we obtained a $1.20 billion Credit Facility, which
refinanced and replaced our prior $1.09 billion unsecured revolving credit facility that was due to mature on February 18, 2027.
The Credit Facility will mature on November 12, 2030 and contains an uncommitted accordion feature under which its
aggregate principal amount of available loans can be increased to a maximum of $1.70 billion under certain conditions,
including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $250.0 million for the
issuance of letters of credit. Interest on amounts borrowed under the Credit Facility accrues at a term SOFR, daily SOFR or a
base rate, plus a spread that depends on our Leverage Ratio, as defined under the Credit Facility. Interest is payable monthly
(base rate or daily SOFR borrowings) or each month or three months (term SOFR borrowings). The Credit Facility also
requires the payment of a commitment fee at a per annum rate ranging from .15% to .35% of the unused commitment, based on
our Leverage Ratio. Under the terms of the Credit Facility, we are required, among other things, to maintain compliance with
various covenants, including financial covenants relating to our consolidated tangible net worth, Leverage Ratio, and either an
Interest Coverage Ratio or a minimum level of liquidity, each as defined therein. Our obligations to pay borrowings under the
Credit Facility are guaranteed on a joint and several basis by our Guarantor Subsidiaries. The amount of the Credit Facility
available for cash borrowings and the issuance of letters of credit depends on the total cash borrowings and letters of credit
outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility. As of
November 30, 2025, we had no cash borrowings and $1.6 million of letters of credit outstanding under the Credit Facility.
Therefore, as of November 30, 2025, we had nearly $1.20 billion available for cash borrowings under the Credit Facility, with
up to $248.4 million of that amount available for the issuance of letters of credit.
Senior Unsecured Term Loan. On November 12, 2025, we also entered into an amendment to our Term Loan with the
lenders party thereto that extended its maturity from August 25, 2026 to November 12, 2029. Interest under the Term Loan
accrues at a term SOFR, daily SOFR or base rate, plus a spread that depends on our Leverage Ratio. Interest is payable
quarterly (base rate borrowing), monthly (daily SOFR loans), or each month or three months (term SOFR borrowing). The
Term Loan contains various covenants that are substantially the same as those under the Credit Facility. The proceeds drawn
under the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries. As of November 30, 2025 and
2024, the weighted average annual interest rates on our outstanding borrowings under the Term Loan were 5.4% and 6.0%,
respectively.
LOC Facility. We maintain a LOC Facility to obtain letters of credit from time to time in the ordinary course of operating
our business. Under the LOC Facility, which expires on February 13, 2028, we may issue up to $100.0 million of letters of
credit. As of November 30, 2025 and 2024, we had letters of credit outstanding under the LOC Facility of $68.2 million and
$73.3 million, respectively.
Senior Notes. All the senior notes outstanding at November 30, 2025 and 2024 represent senior unsecured obligations that
are guaranteed by certain of our subsidiaries and rank equally in right of payment with all of our and our Guarantor
Subsidiaries’ existing unsecured and unsubordinated indebtedness. All of our senior notes were issued in underwritten public
offerings. Interest on each of these senior notes is payable semi-annually.
The key terms of each of our senior notes outstanding as of November 30, 2025 were as follows (dollars in thousands):
Redeemable Prior to Maturity | Effective Interest Rate | |||||||||
Notes Payable | Principal | Issuance Date | Maturity Date | |||||||
6.875% Senior notes | $300,000 | February 20, 2019 | June 15, 2027 | Yes (a) | 7.1% | |||||
4.80% Senior notes | 300,000 | November 4, 2019 | November 15, 2029 | Yes (a) | 5.0 | |||||
7.25% Senior notes | 350,000 | June 22, 2022 | July 15, 2030 | Yes (b) | 7.5 | |||||
4.00% Senior notes | 390,000 | June 9, 2021 | June 15, 2031 | Yes (a) | 4.2 |
(a)At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal
to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest on the notes being redeemed (exclusive of interest accrued to the
applicable redemption date), discounted to the redemption date at a defined rate, plus, in each case, accrued and unpaid
interest on the notes being redeemed to, but excluding, the applicable redemption date, except that six months prior to the
stated maturity date for these notes, the redemption price will be equal to 100% of the principal amount of the notes being
redeemed, plus accrued and unpaid interest on the notes being redeemed to, but excluding, the applicable redemption date.
(b)At our option, these notes may be redeemed, in whole at any time or in part from time to time, on or after July 15, 2025, at
the applicable specified redemption price, including accrued and unpaid interest, if any, to, but excluding, the applicable
redemption date. Depending on the redemption date, the applicable redemption price ranges from 100% to 103.625% of
the principal amount of the notes to be redeemed.
If a change in control occurs as defined in the instruments governing our senior notes, we would be required to offer to
purchase all of our outstanding senior notes at 101% of their principal amount, together with all accrued and unpaid interest, if
any.
The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the
indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or
engage in sale-leaseback transactions involving property above a certain specified value. In addition, the indenture contains
certain limitations related to mergers, consolidations, and sales of assets.
As of the date of this report, we were in compliance with the applicable terms of all our covenants and other requirements
under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility, and the mortgages and land
contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit
and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. Our ability to
access the Credit Facility’s full borrowing capacity, as well as the LOC Facility’s full issuance capacity, also depends on the
ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and
financial institutions, to meet their commitments to fund loans, extend credit or provide payment guarantees to or for us under
those instruments. There are no agreements that restrict our payment of dividends other than the Credit Facility and the Term
Loan, which would restrict our payment of certain dividends, such as cash dividends on our common stock, if a default under
the Credit Facility or the Term Loan exists at the time of any such payment, or if any such payment would result in such a
default (other than dividends paid within 60 days after declaration, if there was no default at the time of declaration).
Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of November 30, 2025, inventories having a
carrying value of $16.8 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.
Shelf Registration. Our 2023 Shelf Registration is filed with the SEC. The 2023 Shelf Registration registers the offering
of securities that we may issue from time to time in amounts to be determined. Our ability to issue securities is subject to
market conditions and, with respect to debt securities, other factors impacting our borrowing capacity. We have not made any
offerings of securities under the 2023 Shelf Registration.
Principal payments on our notes payable are due during each year ending November 30 as follows: 2026 — $.8 million;
2027 — $301.0 million; 2028 — $.8 million; 2029 — $660.4 million; 2030 — $350.0 million; and thereafter — $390.0
million.About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.