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DEBT AND NON-RECOURSE DEBT | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
DEBT AND NON-RECOURSE DEBT | DEBT AND NON-RECOURSE DEBT Debt The following table details our outstanding debt balance and its associated interest rates:
($ in millions) | September 30, 2024 |  | December 31, 2023
Debt(1) |  |  |
Senior secured credit facility |  |  |
Term loan with a rate of 7.747%, due 2028 | $ | 1,261 |  |  | $ | 1,271 |
Term loan with a rate of 7.497%, due 2031 | 896 |  |  | — |
Revolver with a rate of 7.295%, due 2026 | 668 |  |  | 438 |
Senior notes with a rate of 5.000%, due 2029 | 850 |  |  | 850 |
Senior notes with a rate of 4.875%, due 2031 | 500 |  |  | 500 |
Senior notes with a rate of 6.625%, due 2032 | 900 |  |  | — |
Other debt (4) | 37 |  |  | 33 |
Total debt, gross | 5,112 |  |  | 3,092 |
Less: unamortized deferred financing costs and discounts(2)(3)(5) | (73) |  |  | (43) |
Total debt, net | $ | 5,039 |  |  | $ | 3,049 |
(1)As of September 30, 2024 and December 31, 2023, weighted-average interest rates were 6.699% and 6.649%, respectively. (2)Amount includes unamortized deferred financing costs related to our term loans and senior notes of $39 million and $25 million, respectively, as of September 30, 2024 and $21 million and $17 million, respectively, as of December 31, 2023. This amount also includes unamortized original issuance discounts of $6 million and $5 million as of September 30, 2024 and December 31, 2023, respectively. (3)Amount does not include unamortized deferred financing costs of $3 million as of September 30, 2024 and December 31, 2023, respectively, related to our revolving facility which are included in Other assets in our unaudited condensed consolidated balance sheets. (4)This amount includes $5 million related to the recourse portion on the NBA Receivables Facility, which is generally limited to the greater of 15% of the outstanding borrowings and $5 million, subject to certain exceptions. (5)Amount also includes unamortized discount of $3 million related to the Bluegreen debt recognized at the Bluegreen Acquisition Date. Senior secured credit facility On January 17, 2024, we entered into Amendment No. 4 (the “Amendment”) to the Credit Agreement and incurred $900 million of new term loans that will mature on January 17, 2031. Proceeds from the new term loans were used to pay the Bluegreen Acquisition consideration, fees and expenses incurred in connection with the Amendment and to refinance the repayment of certain indebtedness of Bluegreen and its subsidiaries. On April 8, 2024, we amended our Term Loan due 2028 under the Senior secured credit facility. Under the amendment, the new interest rate is SOFR plus 2.50%, down from SOFR plus 2.75%. Also, the credit spread adjustment for the Term Loan due 2028 was removed. On July 18, 2024, we amended our Term Loan due 2031 under the Senior secured credit facility. Under the amendment, the new interest rate is SOFR plus 2.25%, down from SOFR plus 2.75%. On October 8, 2024, we entered into a new $400 million senior secured term loan (“Term Loan A”) due January 2028, with a pricing of SOFR plus 1.75%. The proceeds were used to partially pre-pay the Term Loan due 2028. As of September 30, 2024, we had $24 million of letters of credit outstanding under the revolving credit facility and $1 million outstanding backed by cash collateral. We were in compliance with all applicable maintenance and financial covenants and ratios as of September 30, 2024. As of September 30, 2024, we have $308 million remaining borrowing capacity under the revolver facility. We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. These interest rate swaps are associated with the SOFR-based senior secured credit facility. As of September 30, 2024, these interest rate swaps convert the SOFR-based variable rate on our Term Loan due 2028 to average fixed rates of 1.55% per annum with maturities between 2026 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps. As of September 30, 2024, the aggregate notional values of the interest rate swaps under our Term Loan due 2028 was $550 million. Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and are recorded at their estimated fair value as an asset in Other assets in our condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the estimated fair values of our cash flow hedges were $29 million and $42 million, respectively. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. We classify cash inflows and outflows from derivatives that hedge interest rate risk within operating activities in the unaudited condensed consolidated statements of cash flows. The following table reflects the activity, net of tax, in Accumulated other comprehensive income related to our derivative instruments during the nine months ended September 30, 2024:
| Net unrealized gain on derivative instruments
Balance as of December 31, 2023 | $ | 32 |
Other comprehensive income before reclassifications, net | 2 |
Reclassifications to net income | (12) |
Balance as of September 30, 2024 | $ | 22 |
Senior Notes due 2032 On January 10, 2024, we completed an offering for $900 million aggregate principal amount of 6.625% senior secured notes due 2032 (“Senior Notes due 2032”) issued by our wholly-owned subsidiaries, Hilton Grand Vacations Borrower Escrow, LLC and Hilton Grand Vacations Borrower Escrow, Inc. Proceeds from the new secured notes were used to pay the Bluegreen Acquisition consideration, fees and expenses incurred in connection with the Amendment and to refinance the repayment of certain indebtedness of Bluegreen and its subsidiaries. The Senior Notes due 2032 are guaranteed on a senior secured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of September 30, 2024. Senior Notes due 2029 and 2031 The Senior Unsecured Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of September 30, 2024. Junior subordinated debentures As part of the Bluegreen Acquisition, we assumed junior subordinated debentures. During the nine months ended September 30, 2024, the junior subordinated debentures were paid down in full for $171 million. See Note 9: Investments in Unconsolidated Affiliates for additional information. Non-recourse Debt The following table details our outstanding non-recourse debt balance and associated interest rates:
($ in millions) | September 30, 2024 |  | December 31, 2023
Non-recourse debt(1) |  |  |
Timeshare Facility with an average rate of 6.530%, due 2027(2) | $ | — |  |  | $ | 400 |
Grand Islander Timeshare Facility with an average rate of 6.716%, due 2029 | — |  |  | 124 |
HGV Securitized Debt 2018 with a weighted average rate of 3.602%, due 2032 | 47 |  |  | 66 |
HGV Securitized Debt 2019 with a weighted average rate of 2.431%, due 2033 | 53 |  |  | 70 |
HGV Securitized Debt 2022-1 with a weighted average rate of 4.304%, due 2034 | 86 |  |  | 118 |
HGV Securitized Debt 2022-2 with a weighted average rate of 4.826%, due 2037 | 141 |  |  | 188 |
HGV Securitized Debt 2023 with a weighted average rate of 5.937%, due 2038 | 197 |  |  | 264 |
HGV Securitized Debt 2024-2 with a weighted average rate of 5.685%, due 2038 | 333 |  |  | — |
HGV Securitized Debt 2024-1 with a weighted average rate of 6.419%, due 2039 | 203 |  |  | — |
HGV Securitized Debt 2020 with a weighted average rate of 3.658%, due 2039 | 73 |  |  | 95 |
Grand Islander Securitized Debt 2017 with a weighted average rate of 2.965%, due 2029 | — |  |  | 15 |
Grand Islander Securitized Debt 2019 with a weighted average rate of 3.316%, due 2033 | 41 |  |  | 55 |
Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160%, due 2033 | 67 |  |  | 87 |
Bluegreen Securitized Debt 2017 with a weighted average rate of 3.117%, due 2032 | 12 |  |  | — |
Bluegreen Securitized Debt 2018 with a weighted average rate of 4.019%, due 2034 | 20 |  |  | — |
Bluegreen Securitized Debt 2020 with a weighted average rate of 2.597%, due 2036 | 44 |  |  | — |
Bluegreen Securitized Debt 2022 with a weighted average rate of 4.599%, due 2037 | 94 |  |  | — |
Bluegreen Securitized Debt 2023 with a weighted average rate of 6.321%, due 2038 | 159 |  |  | — |
Quorum Purchase Facility with an average rate of 5.020%, due 2034 | 6 |  |  | — |
NBA Receivables Facility with an average rate of 6.630%, due 2031(5) | 17 |  |  | — |
Total non-recourse debt, gross | 1,593 |  |  | 1,482 |
Less: unamortized deferred financing costs and discount(3)(4) | (29) |  |  | (16) |
Total non-recourse debt, net | $ | 1,564 |  |  | $ | 1,466 |
(1)As of September 30, 2024 and December 31, 2023, weighted-average interest rates were 5.068% and 5.095%, respectively. (2)The revolving commitment period of the Timeshare Facility terminates in March 2026; however, the repayment maturity date extends 12 months beyond the commitment termination date to March 2027. (3)Amount relates to securitized debt only and does not include unamortized deferred financing costs of $3 million and $2 million as of September 30, 2024 and December 31, 2023, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets. (4)Amount also includes unamortized discount of $2 million related to the Grand Islander securitized debt recognized at the Grand Islander Acquisition Date and unamortized discount of $11 million related to the Bluegreen securitized and non-recourse debt recognized at the Bluegreen Acquisition Date. (5)Recourse on the NBA Receivables Facility is generally limited to the greater of 15% of the outstanding borrowings and $5 million, subject to certain exceptions. In April 2024, we completed a securitization of approximately $240 million of gross timeshare financing receivables and issued approximately $101 million of 5.75% notes, $58 million of 5.99% notes, $46 million of 6.62% notes, and $35 million of 8.85% notes due September 2039. The issued notes are backed by pledged assets, consisting primarily of a pool of Bluegreen timeshare financing receivables secured by first mortgages and a letter of credit. The notes are a non-recourse obligation and are payable solely from the pool of timeshare financing receivables pledged as collateral for the notes. The proceeds of the notes were used to pay down in part some of our existing debt and for other general corporate purposes. Additionally, in connection with the securitization, we incurred $4 million in debt issuance costs. In May 2024, we completed a securitization of approximately $375 million of gross timeshare financing receivables and issued approximately $217 million of 5.50% notes, $80 million of 5.65% notes, $57 million of 5.99% notes, and $21 million of 6.91% notes due March 2038. The issued notes are backed by pledged assets, consisting primarily of a pool of timeshare loans secured by first mortgages, first deeds of trust, membership interests or timeshare interests (other than a fee simple interest in real estate). The notes are a non-recourse obligation and are payable solely from the timeshare financing receivables pledged as collateral for the notes. The proceeds of the notes were used to pay down in part some of our existing debt and for other general corporate purposes. Additionally, in connection with the securitization, we incurred $5 million in debt issuance costs. The Timeshare Facility is a non-recourse obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. As of September 30, 2024, our Timeshare Facility has a remaining borrowing capacity of $750 million. In March 2024, we renewed our Timeshare Facility agreement under new terms, which included extending the commitment and maturity period to March 2026 and March 2027, respectively, and permitting to pledge as collateral certain timeshare loans associated to Grand Islander. On January 31, 2024, we terminated the Grand Islander Timeshare Facility. In connection with the Bluegreen Acquisition, we acquired an additional timeshare facility which was subsequently terminated in February 2024. We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $51 million and $48 million as of September 30, 2024 and December 31, 2023, respectively, and were included in Restricted cash in our condensed consolidated balance sheets. Debt Maturities The contractual maturities of our debt and non-recourse debt as of September 30, 2024 were as follows:
($ in millions) | Debt |  | Non-recourse Debt |  | Total
Year |  |  |  |  |
2024 (remaining three months) | $ | 6 |  |  | $ | 112 |  |  | $ | 118 |
2025 | 27 |  |  | 378 |  |  | 405 |
2026 | 693 |  |  | 310 |  |  | 1,003 |
2027 | 23 |  |  | 237 |  |  | 260 |
2028 | 1,238 |  |  | 180 |  |  | 1,418 |
Thereafter | 3,125 |  |  | 376 |  |  | 3,501 |
Total | $ | 5,112 |  |  | $ | 1,593 |  |  | $ | 6,705 |

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