K. Hovnanian Enterprises, Inc. Prices Offering of $450 Million of 8.000% Senior Notes Due 2031 and $450 Million of 8.375% Senior Notes Due 2033

Rhea-AI Summary

K. Hovnanian Enterprises (NYSE:HOV) has announced the pricing of two senior notes offerings totaling $900 million. The offering consists of $450 million of 8.000% Senior Notes due 2031 and $450 million of 8.375% Senior Notes due 2033.

The proceeds will be used to redeem the company's existing secured notes, including the 8.0% Senior Secured 1.125 Lien Notes due 2028 at 104.000% of principal and the 11.75% Senior Secured 1.25 Lien Notes due 2029 at 100.000% plus "make-whole" premium. Additionally, funds will be used to repay the Senior Secured 1.75 Lien Term Loan Facility due 2028.

The notes offering, expected to close around September 25, 2025, is restricted to qualified institutional buyers under Rule 144A and offshore transactions under Regulation S of the Securities Act.

Positive

• Refinancing of existing debt with new longer-dated maturities to 2031 and 2033
• Large-scale $900 million offering demonstrates strong market access
• Simplified debt structure by consolidating multiple secured notes into new senior notes

Negative

• High interest rates on new notes at 8.000% and 8.375%
• Additional costs from redemption premium (104%) and make-whole payments on existing notes
• Continued high leverage with $900 million in new debt issuance

Insights

Fixed Income Analyst

Hovnanian's $900M debt refinancing extends maturities while transitioning from secured to unsecured debt, potentially providing operational flexibility despite higher rates.

Hovnanian is executing a $900 million debt refinancing transaction that replaces secured debt with unsecured notes, consisting of $450 million of 8.000% Senior Notes due 2031 and $450 million of 8.375% Senior Notes due 2033. This transaction effectively replaces three existing secured debt instruments: the 8.0% Senior Secured 1.125 Lien Notes due 2028, the 11.75% Senior Secured 1.25 Lien Notes due 2029, and the Senior Secured 1.75 Lien Term Loan Facility due 2028.

The refinancing accomplishes several key objectives for Hovnanian's capital structure. First, it extends debt maturities from 2028-2029 to 2031-2033, providing 2-5 years of additional runway. Second, it transitions from secured debt (which restricts the use of collateral) to unsecured debt, potentially giving the company more operational flexibility. However, this increased flexibility comes at a cost – the new notes carry interest rates of 8.000% and 8.375%, which are relatively high in absolute terms.

The replacement of the 11.75% secured notes with lower-rate unsecured notes suggests potential interest expense savings on that portion, though the redemption includes a "make-whole premium" that will partially offset these savings. The transaction appears to be part of a broader liability management strategy to optimize the company's debt structure while navigating the current high interest rate environment. However, the company will incur one-time expenses related to redemption premiums and transaction fees that will impact near-term financials.

MATAWAN, N.J., Sept. 11, 2025 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV) (the “Company”) announced today that its wholly owned subsidiary, K. Hovnanian Enterprises, Inc. (“K. Hovnanian”), priced an offering of $450 million aggregate principal amount of 8.000% Senior Notes due 2031 and $450 million aggregate principal amount of 8.375% Senior Notes due 2033 in a private placement (collectively, the “Notes”). The Notes will be guaranteed by the Company and substantially all of its subsidiaries. The sale of the Notes is expected to be consummated on or about September 25, 2025, subject to customary closing conditions.

K. Hovnanian intends to use the net proceeds from the offering of the Notes to (i) fund the redemption of the entire outstanding principal amount of its 8.0% Senior Secured 1.125 Lien Notes due 2028 (the “1.125 Lien Notes”) at a redemption price equal to 104.000% of the principal amount thereof and the entire outstanding principal amount of its 11.75% Senior Secured 1.25 Lien Notes due 2029 (the “1.25 Lien Notes” and together with the 1.125 Lien Notes, the “Existing Secured Notes”) at a redemption price equal to 100.000% of the principal amount thereof plus the applicable “make-whole” premium, in each case, plus accrued and unpaid interest to, but excluding, the redemption date, (ii) repay in full all outstanding loans under its Senior Secured 1.75 Lien Term Loan Facility due 2028 at par, plus accrued and unpaid interest to, but excluding, the prepayment date and (iii) pay all fees and expenses related thereto and the offering of the Notes.

The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States, or for the benefit of U.S. persons, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities or blue sky laws. Accordingly, the Notes are being offered only to persons reasonably believed to be “qualified institutional buyers” in reliance on the exemption from registration provided by Rule 144A under the Securities Act, and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act. This announcement does not constitute an offer to sell or the solicitation of an offer to buy Notes in any jurisdiction in which such an offer or sale would be unlawful. In addition, this announcement does not constitute a notice of redemption of the Existing Secured Notes.

ABOUT HOVNANIAN ENTERPRISES, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company’s homes are marketed and sold under the trade name K. Hovnanian^® Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’s^® Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes, mortgage rates, inflation, supply chain issues, customer incentives and underlying factors. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (4) increases in inflation; (5) adverse weather and other environmental conditions and natural disasters; (6) the seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (8) reliance on, and the performance of, subcontractors; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) increases in cancellations of agreements of sale; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) global economic and political instability (18) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (19) availability and terms of financing to the Company; (20) the Company’s sources of liquidity; (21) changes in credit ratings; (22) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (23) potential liability as a result of the past or present use of hazardous materials; (24) operations through unconsolidated joint ventures with third parties; (25) significant influence of the Company’s controlling stockholders; (26) availability of net operating loss carryforwards; (27) loss of key management personnel or failure to attract qualified personnel; and (28) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2024 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2025 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Contact:	Brad G. O’Connor	Jeffrey T. O’Keefe
	Chief Financial Officer	Vice President, Investor Relations
	732-747-7800	732-747-7800

FAQ

What is the size and interest rate of K. Hovnanian's (HOV) new notes offering?

K. Hovnanian is offering $900 million in total, split between $450 million of 8.000% notes due 2031 and $450 million of 8.375% notes due 2033.

How will K. Hovnanian (HOV) use the proceeds from the notes offering?

The proceeds will be used to redeem existing secured notes, repay the Senior Secured 1.75 Lien Term Loan Facility, and pay related fees and expenses.

When will K. Hovnanian's (HOV) new notes offering close?

The notes offering is expected to close on or about September 25, 2025, subject to customary closing conditions.

Who can purchase K. Hovnanian's (HOV) new notes?

The notes are only available to qualified institutional buyers under Rule 144A and to certain persons in offshore transactions under Regulation S of the Securities Act.

What is the redemption price for K. Hovnanian's (HOV) existing secured notes?

The 1.125 Lien Notes will be redeemed at 104.000% of principal, while the 1.25 Lien Notes will be redeemed at 100.000% plus make-whole premium, both with accrued and unpaid interest.