Lennar Corp. is proposing to sell $300 million in debt, and possible uses of the proceeds include purchasing distressed portfolios of mortgage loans and foreclosed real estate.
The Miami-based homebuilder has a unit, Rialto Investments, which purchases distressed assets.
This includes a joint venture with AllianceBernstein which purchases assets through the federal government's Public-Private Investment Program.
According to a release from Lennar, the initial buyers of the convertible senior notes due 2021 are expected to have the option of buying an additional $45 million to cover over-allotments.
The notes will be convertible at the option of the holders into Lennar Class A common stock. There will be semi-annual interest payments. They will be guaranteed by some of Lennar's subsidiaries.
They will mature on Nov. 15, 2021. On Nov. 15, 2016, holders have the opportunity to have Lennar repurchase the notes for 100% of the principal plus accrued but unpaid interest. Starting Nov. 20, 2016, Lennar can redeem the notes for principal plus accrued but unpaid interest.
Besides the distressed asset purchases, proceeds are expected to be used for the repayment or repurchase of other debt and land acquisitions.