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ARLINGTON, Texas - Forestar Group Inc. (NYSE: FOR), a residential lot development company, has disclosed the pricing terms of its cash tender offer to purchase any and all of its outstanding 3.850% Senior Notes due 2026. The offer, set to expire today, is part of Forestar’s financial strategy, which includes a concurrent debt financing effort. This move aligns with the prudent debt management practices of its parent company D.R. Horton (NYSE: DHI), which according to InvestingPro data, operates with a conservative debt-to-capital ratio of 0.11 and maintains a strong current ratio of 6.77.
The purchase price for the notes, which have an aggregate principal amount of $400 million, was determined by a fixed spread plus the yield based on the offer-side price of the U.S. Treasury Reference Security, resulting in a price of $999.46 per $1,000 of principal. This calculation assumes the notes will be redeemed on May 15, 2025, the next date when Forestar can redeem them at 100% of their principal value.
Holders of the notes that are accepted for purchase will also receive accrued and unpaid interest up to, but not including, the initial payment date, which is expected to be Sunday, March 14, 2025. This is contingent on the tender offer not being extended or terminated earlier.
The tender offer is subject to certain conditions, including the successful completion of a debt financing, the terms of which must be satisfactory to Forestar. There is no guarantee that any notes will be purchased, and the tender offer may be amended, extended, terminated, or withdrawn at Forestar’s discretion.
Forestar has appointed J.P. Morgan Securities LLC, Mizuho Securities USA LLC, TD Securities (USA) LLC, and Wells Fargo Securities, LLC as dealer managers for the tender offer. D.F. King & Co., Inc. is serving as the tender agent and information agent.
The company, a majority-owned subsidiary of D.R. Horton, Inc., operates in 62 markets across 24 states and delivered over 14,200 residential lots during the twelve-month period ending December 31, 2024. D.R. Horton, with a market capitalization of $41.82 billion and annual revenue of $36.69 billion, has earned a "GREAT" financial health score according to InvestingPro analysis. Discover comprehensive insights and 12+ additional ProTips about D.R. Horton’s market position and future outlook with an InvestingPro subscription, including exclusive access to detailed Pro Research Reports covering 1,400+ top US stocks. This press release is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. Actual results and plans could differ materially from those discussed in the forward-looking statements.
In other recent news, D.R. Horton has finalized a public offering of $700 million in senior notes due in 2035, with an interest rate of 5.500%. The net proceeds from the sale totaled $695.2 million, after accounting for underwriting discounts. These notes are unsecured and guaranteed by D.R. Horton’s homebuilding subsidiaries, providing additional security to investors. S&P Global Ratings has assigned a ’BBB+’ rating to this offering, indicating a stable outlook based on the company’s low leverage and strong financial position. The proceeds are expected to support general corporate purposes and potentially fund new projects or refinance existing debt. Additionally, Seaport Research has upgraded D.R. Horton from neutral to buy, reflecting a positive outlook on the homebuilding sector despite some fundamental challenges. In related developments, Forestar Group, a subsidiary of D.R. Horton, plans to offer $500 million in senior unsecured notes, aiming to use the proceeds for a tender offer and general corporate purposes. These strategic financial moves underscore D.R. Horton’s efforts to strengthen its financial structure amidst evolving market conditions.
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