United Homes Group, Inc.UHG
United Homes Group, Inc. Debt Disclosure
Note 9 - Debt
The following table and descriptions summarize the amounts outstanding under the Company’s syndicated line of credit and term loan (dollars presented in thousands):
| December 31, 2025 | |||||||||||
| Weighted average interest rate | Outstanding Balance | ||||||||||
| Syndicated line of credit: | |||||||||||
| Wells Fargo Bank | 7.48 | % | $ | 21,177 | |||||||
| Regions Bank | 7.48 | % | 17,920 | ||||||||
| Flagstar Bank | 7.48 | % | 16,291 | ||||||||
| United Bank | 7.48 | % | 13,033 | ||||||||
| Third Coast Bank | 7.48 | % | 9,775 | ||||||||
| Total Syndicated line of credit | $ | 78,196 | |||||||||
| Term loan, net | 11.52 | % | $ | 67,450 | |||||||
| December 31, 2024 | |||||||||||
| Weighted average interest rate | Outstanding Balance | ||||||||||
| Syndicated line of credit | |||||||||||
| Wells Fargo Bank | 8.41 | % | $ | 13,595 | |||||||
| Regions Bank | 8.41 | % | 11,503 | ||||||||
| Flagstar Bank | 8.41 | % | 10,458 | ||||||||
| United Bank | 8.41 | % | 8,366 | ||||||||
| Third Coast Bank | 8.41 | % | 6,274 | ||||||||
| Total Syndicated line of credit | $ | 50,196 | |||||||||
| Term loan, net | 11.70 | % | $ | 67,150 | |||||||
Syndicated Line of Credit
On January 26, 2024, the Company entered into the Second Amendment to its existing credit facility (as amended, the "Syndicated Line"). As a result of this amendment the Company established a process for the joinder of additional subsidiary borrowers of the Company, and Rosewood was joined, jointly and severally with the Company and GSH, as a borrower to the syndicated line of credit with Wells Fargo Bank, National Association (“Wells Fargo”). On August 2, 2024 (the “Third Amendment Effective Date”), the Company entered into the Third Amendment to the Syndicated Line (“Third Amendment”) which extended the maturity date to August 2, 2027 except with respect to two non-extending lenders (representing $73.3 million of the committed amount), reduced the borrowing capacity to $220.0 million, and amended three financial covenants. On September 29, 2025 (the “Fourth Amendment Effective Date”), the Company entered into the Fourth Amendment to the Syndicated Line (“Fourth Amendment”) which amended certain financial covenants for the period beginning on the Fourth Amendment Effective Date and continuing until the Specified Covenant Termination Date, defined as January 1, 2026, provided that if the debt service coverage ratio is greater than or equal to 2.00 to 1.00 as of the last day of any fiscal quarter from the Fourth Amendment Effective Date through and including December 31, 2025, then the Specified Covenant Termination Date is one day prior to the last day of such fiscal quarter. No other significant terms of the arrangements were changed as a result of these amendments. The financial covenants referenced below are reflective of these amendments.
The advances from the Syndicated Line are used to build homes and are repaid incrementally upon individual home sales. The Syndicated Line is collateralized by the homes under construction and developed lots. The Syndicated Line is fully secured, and the availability of funds is based on the inventory value at the time of the draw request. Interest is accrued based on the total syndication balance and is paid monthly. As the average construction time for homes is less than one year, the Syndicated Line is considered short-term as of December 31, 2025 and 2024.
The interest rate is based on Secured Overnight Financing Rate (“SOFR”) plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin.
The remaining availability to be drawn down, calculated in accordance with the Syndicated Line, was $56.4 million as of December 31, 2025 and $96.4 million as of December 31, 2024. The Syndicated Line also includes a $2.0 million letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears.
The Syndicated Line contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (i) $71.0 million or, for the period beginning on the Fourth Amendment Effective Date through the Specified Covenant Termination Date, $76 million, plus (ii) 25% of positive actual consolidated earnings earned beginning with the quarter ended September 30, 2025, plus (iii) 100% of new equity contributed to the Company, plus (iv) 100% of any increase in tangible net worth resulting from an equity issuance upon the conversion or exchange of any security constituting indebtedness that is convertible or exchangeable, or is being converted or exchanged, for equity interests, and plus (v) 100% of the amount of any repurchase of equity interests in the Company; (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.25 to 1.00, except for up to two quarterly measurement periods in which the ratio shall not exceed 2.50 to 1.00 during the period beginning on the Third Amendment Effective Date and ending on December 31, 2025; (c) a minimum debt service coverage ratio of no less than 1.35 to 1.00 for the fiscal quarter ending September 30, 2025 and 1.50 to 1.00 for the fiscal quarter ending December 31, 2025, and a minimum of 2.00 to 1.00
thereafter, beginning with the quarter in which the Company reports a ratio of at least 2.00, but in no event later than the Specified Covenant Termination Date; (d) a minimum liquidity amount beginning on the Fourth Amendment Effective Date through the Specified Covenant Termination Date of not less than $45.0 million and unrestricted cash of not less than $17.5 million, or $37.5 million and unrestricted cash of not less than $15.0 million, beginning with the quarter in which the Company reports a ratio of at least 2.00, but in no event later than the Specified Covenant Termination Date. The Company was in compliance with all debt covenants as of December 31, 2025 and 2024.
The Company recognized $1.4 million of amortized deferred financing costs within Other expense, net in the consolidated statements of operations for both of the years ended December 31, 2025 and 2024. The Company capitalized an additional $0.1 million of deferred financing costs in connection with the Fourth Amendment, which are being amortized over the remaining term of the Syndicated Line. Outstanding deferred financing costs related to the Company’s Syndicated line of credit were $2.2 million and $3.5 million as of December 31, 2025 and December 31, 2024, respectively, and are included in Prepaid expenses and other assets on the consolidated balance sheets as the Syndicated Line is a revolving arrangement.
Term Loan
On December 11, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, GSH, Kennedy Lewis Agency Partners, LLC (“Administrative Agent”), and the lenders party thereto (the “Lenders”) pursuant to which the Lenders thereunder funded a $70.0 million subordinated term loan, the proceeds of which were used to redeem the outstanding Convertible Notes. See Note 14 - Convertible Notes Payable for further details. The term loan was issued at an original issuance discount of $2.1 million, and the Company incurred debt issuance costs of $0.8 million that were allocated to the term loan, resulting in net cash proceeds of $67.1 million.
The Credit Agreement provides for a term loan of $70.0 million maturing on the earlier of (a) (i) December 11, 2030, or (ii) the maturity date as defined in the Company’s Second Amended and Restated Credit Agreement, dated as of August 10, 2023, as amended and (iii) the date on which the indebtedness pursuant to the Syndicated Line is accelerated in accordance with the terms of the Syndicated Line with Wells Fargo. As of December 31, 2025, the effective maturity date based on these provisions is August 2, 2027. At the election of the Company, the term loan will either be (i) a SOFR Loan or (ii) an Alternate Base Rate (“ABR”) Loan. Each SOFR Loan will bear interest for each day during each interest period at a rate per annum equal to (a) Adjusted Term SOFR (as defined by the Credit Agreement), plus (b) the applicable margin (ranging from 675 basis points to 775 basis points) based on the Company’s leverage ratio as determined in accordance with the pricing grid set forth in the Credit Agreement. The Company may elect from time to time to convert SOFR Loans to ABR Loans; provided that such conversion be made on the last day of an interest period with respect thereto. Additionally, the Company may elect from time to time to convert ABR Loans to SOFR Loans; provided that no such conversion can take place when any Event of Default (as defined by the Credit Agreement) has occurred and is continuing. As of December 31, 2025, the term loan under the Credit Agreement is classified as a SOFR Loan. The effective interest rate of the Credit Agreement is 12.40%.
On September 29, 2025 (the “KL First Amendment Effective Date”), the Company entered into the First Amendment to Credit Agreement (the “KL First Amendment”), amending the Credit Agreement. The KL First Amendment modified certain financial covenants and clarified language related to the Applicable Premium and Make-Whole Premium that may be payable in certain instances outlined in the Credit Agreement. Except for these updates, no material changes were made to the Credit Agreement.
The Company generally cannot prepay the outstanding balance on the term loan, voluntarily or mandatorily, without also contemporaneously paying a prepayment fee equal to the Applicable Premium as defined in the Credit Agreement. Subject to the terms and conditions set forth in the Credit Agreement, UHG may be required to make mandatory prepayments in certain circumstances, including if a change of control occurs. In the event of a change of control, the Applicable Premium is reduced by 50% of the amount due and payable on the date of prepayment.
The Credit Agreement contains certain financial covenants, including (a) that the Company must maintain a minimum tangible net worth of at least $70.0 million; (b) a maximum leverage covenant that prohibits the consolidated total leverage ratio of the Company and its subsidiaries from exceeding 2.50 to 1.00 for any fiscal quarter (as determined on the last day of each fiscal quarter); provided that the Company may exceed such ratio in two instances from December 11, 2024 until December 31, 2025 so long as the consolidated total leverage ratio does not exceed 2.63 to 1.00 as of the last day of such fiscal quarter; (c) a minimum debt service coverage ratio of the Company and its subsidiaries (as determined on the last day of each fiscal quarter) of (x) not less than 1.35 to 1.00 through December 31, 2025 and (y) thereafter greater than 1.50 to 1.00, provided that the Company and its subsidiaries may allow such debt service coverage ratio to be less than 1.35 to 1.00 in two instances from December 11, 2024 until December 31, 2025 so long as the debt service coverage ratio is greater than or equal to 1.20 to 1.00 as of the last day of such fiscal quarter; and (d) that the Company maintain minimum liquidity of not less than $20.0 million and unrestricted cash of not less than $10.0 million at all times. The obligations
under the Credit Agreement are guaranteed by UHG and secured by a security interest in UHG’s 100% ownership and economic interest of GSH. The Company was in compliance with all debt covenants as of December 31, 2025 and 2024.
Term Loan Embedded Derivative
The term loan contains various features that meet the definition of an embedded derivative and require bifurcation as they are not clearly and closely related to the host instrument in accordance with ASC 815, Derivatives and Hedging, including change of control provisions, events of default, and indemnification features. The embedded derivative instrument (“term loan embedded derivative”) is remeasured at fair value every reporting period with changes in fair value presented as a Change in fair value of derivative liabilities within the consolidated statements of operations. At the inception of the term loan, the fair value of the term loan embedded derivative was determined to be immaterial. During the fourth quarter of 2025, the Company increased the probability of a change in control which resulted in an increase in the fair value of the term loan embedded derivative.
The disclosed fair value of the term loan embedded derivative is estimated using a discounted cash flow method (a level 3 measurement) that includes the probability that certain call and put premiums are exercised upon qualifying events of default or changes in control. As of December 31, 2025, the fair value of the term loan embedded derivative was $4.6 million, which was the same as its carrying value. As of December 31, 2024 the fair value of the term loan embedded derivative was immaterial.
The key inputs to the valuation model are (i) the probability and timing of a change in control event occurring over the remaining term of the debt; and (ii) the discount rate, which can be influenced by changes in the risk-free rate. Factors that can affect the estimate of fair value at each reporting date, and therefore the amount of gain or loss recorded for a particular period, include imprecision in estimating unobservable market inputs and the selection of particular methodologies and assumptions used to determine the fair value.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 15, 2024 | |
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.