Magazine article American Banker

Home Builder Clears Hurdles to Get $150 Million Line from PNC Group

Magazine article American Banker

Home Builder Clears Hurdles to Get $150 Million Line from PNC Group

Article excerpt

Toll Brothers Inc., home builders to the affluent, recently obtained a new $150 million credit line, but not without a lot of agonizing negotiations.

Though banks are showing renewed interest in lending to the home building industry, credit conditions remain generally tight. And those, like Toll Brothers, that do have access to credit must still jump through hoops to get it.

"In general, there is significantly less available capital with significantly more constraints on it than five years ago," said Joel Rassman, chief financial officer at Toll Brothers.

Based in Huntingdon Valley, Pa., the company builds luxury suburban homes in the Boston-Washington corridor. Most of its houses sell in the $300,000 range. though some cost far more.

Record Number of Contracts

For the fiscal year ended Oct. 31, Toll Brothers reported record contracts for new homes, reflecting what the company described as "tremendous pent-up demand" in the move-up housing market.

Toll Brothers' new unsecured revolver, led by PNC Bank, replaced a credit line that was originally obtained in 1988 and extended several times, most recently in August 1992.

Mr. Rassman said he had hoped that terms and conditions of the new revolver would be less complicated than those in the old credit pact, which was forged with a consortium of banks led by Provident National Bank. Provident is owned by PNC Bank Corp.

Instead, what he got was some 25 pages of "additional descriptions, covenants, and caveats," reflecting banks' heightened concerns about regulatory oversight of their real estate lending, Mr. …

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