RPT-Fitch rates Meritage's proposed Sr. unsecured notes offering 'BB-/RR3'; outlook positive
Nov 21 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned a 'BB-/RR3' rating to Meritage Homes Corporation's (NYSE: MTH), proposed offering of $100 million of senior unsecured notes. The offering is an add-on to its existing 7.15% senior unsecured notes due 2020. The issuance will be equal in right of payment with all other senior unsecured debt. Meritage intends to use the proceeds of the notes offering for general corporate purposes, including the acquisition and development of land and home construction.
The Rating Outlook is Positive. A complete list of ratings follows at the end of this release.
KEY RATING DRIVERS
The ratings and Outlook for MTH are influenced by the company's execution of its business model, conservative land policies, geographic diversity and healthy liquidity position. The Positive Outlook also takes into account Fitch's expectation of further moderate improvement in the housing market in 2013 and 2014, share gains by MTH and hence volume outperformance relative to industry trends as the market continues its shift to trade-up housing (Meritage's strength) and much better profitability and sharply improved credit metrics.
MTH's sales are reasonably dispersed among its 15 metropolitan markets within seven states. During 2012, the company ranked among the top 10 builders in such markets as Dallas/Fort Worth, San Antonio and Austin, TX; Orlando, FL; Phoenix, AZ; Riverside/San Bernardino, CA; Denver, CO; and San Francisco/Oakland/Fremont and Sacramento, CA. The company also builds in the Central Valley, CA; Houston, TX; Inland Empire, CA; Tucson, AZ; Tampa, FL; and Raleigh-Durham and Charlotte, NC. MTH also announced its entry into the Nashville, Tennessee market with its August 2013 acquisition of Phillips Builders. Currently, Fitch estimates about 65% -70% of MTH's home deliveries are to first- and second-time trade-up buyers, 30%-35% to entry-level buyers, less than 5% are to luxury and active adult (retiree) homebuyers.