XML 26 R13.htm IDEA: XBRL DOCUMENT
v3.21.2

Credit Facilities and Notes Payable | 9 Months Ended
--- | ---
Sep. 30, 2021
Debt Disclosure [Abstract] |
Credit Facilities and Notes Payable | NOTE 7. CREDIT FACILITIES AND NOTES PAYABLE The following presents the carrying values of the Company’s debt as of the respective period ends (in thousands):
|  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Credit facilities and notes payable, net |  |  |  |  |  |
Senior secured credit facilities with financial institutions |  | $ | 453,028 |  |  | $ | 49,544 |
Senior secured credit facility with a related party |  |  | 159,999 |  |  |  | 105,397 |
Senior secured debt - other |  |  | 59,788 |  |  |  | — |
Mezzanine secured credit facilities with a related party |  |  | 81,209 |  |  |  | 19,251 |
Notes payable with related parties |  |  | — |  |  |  | 2,385 |
Notes payable - other |  |  | — |  |  |  | 5,309 |
Debt issuance costs |  |  | (2,983 | ) |  |  | (208 | )
Total credit facilities and notes payable, net |  |  | 751,041 |  |  |  | 181,678 |
Current portion - credit facilities and notes payable, net |  |  |  |  |  |
Total credit facilities, other debt and notes payable |  |  | 509,833 |  |  |  | 50,143 |
Total credit facilities and notes payable, net - related party |  |  | 241,208 |  |  |  | 126,825 |
Non current portion - credit facilities and notes payable, net |  |  |  |  |  |
Total credit facilities and notes payable |  |  | — |  |  |  | 4,710 |
Total credit facilities and notes payable, net |  | $ | 751,041 |  |  | $ | 181,678 |
Senior Secured Credit Facilities The Company utilizes senior secured credit facilities that are classified as current liabilities on the accompanying condensed consolidated balance sheets as amounts drawn to purchase and renovate homes are due as homes are sold, which is expected to be within 12 months. The following summarizes certain details related to the Company’s senior secured credit facilities (in thousands, except interest rates):
As of September 30, 2021 |  | Borrowing Capacity |  |  | Outstanding Amount |  |  | Weighted- Average Interest Rate |  |  | Maturity Date
Senior secured credit facility with financial institution 1 |  | $ | 400,000 |  |  | $ | 387,186 |  |  |  | 2.59 | % |  | August 2022
Senior secured credit facility with financial institution 2 |  |  | 400,000 |  |  |  | 65,842 |  |  |  | 2.58 | % |  | March 2024
Senior secured credit facility with a related party |  |  | 225,000 |  |  |  | 159,999 |  |  |  | 4.09 | % |  | December 2022
|  | $ | 1,025,000 |  |  | $ | 613,027 |  |  |  |  |  |
As of December 31, 2020 |  | Borrowing Capacity |  |  | Outstanding Amount |  |  | Weighted- Average Interest Rate |  |  | Maturity Date
Senior secured credit facility with financial institution 1 |  | $ | 200,000 |  |  | $ | 49,544 |  |  |  | 3.72 | % |  | August 2022
Senior secured credit facility with a related party |  |  | 225,000 |  |  |  | 105,397 |  |  |  | 5.28 | % |  | December 2022
|  | $ | 425,000 |  |  | $ | 154,941 |  |  |  |  |  |
As of September 30, 2021, the Company had three senior secured credit facilities, two with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock.  Senior Secured Credit Facility with Financial Institution 1 During 2021, the Company amended its senior secured credit facility with financial institution 1, which collectively increased the borrowing capacity from $200.0 million as of December 31, 2020 to $400.0 million as of September 30, 2021 ($100 million of which is uncommitted). Borrowings on the senior secured credit facility with financial institution 1 accrue interest at a rate based on a LIBOR reference rate plus a margin of 2.5%.  Senior Secured Credit Facility with Financial Institution 2 In September 2021, the Company entered into a Loan and Security Agreement with financial institution 2. The Loan and Security Agreement initially provides for a $300.0 million credit facility available over a 24-month term with an accordion feature providing for additional capacity of $100.0 million. Borrowings on the senior secured credit facility with financial institution 2 accrue interest at a rate based on a LIBOR reference rate plus a margin of 2.5%.  Senior Secured Credit Facility with a Related Party Borrowings on the senior secured credit facility with a related party accrue interest at a rate based on a LIBOR reference rate plus a margin of 4.0%. Borrowings under the Company’s senior secured credit facilities are collateralized by the real estate inventory funded by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against the Company with limited exceptions. The Company has, however, provided limited non-recourse carve-out guarantees under its senior and mezzanine secured credit facilities for certain of the SPEs’ obligations in situations involving “bad acts” by an Offerpad entity and certain other limited circumstances that are generally under the Company’s control. Each senior secured facility contains eligibility requirements that govern whether a property can be financed. When the Company resells a home, the proceeds are used to reduce the corresponding outstanding balance under both the related senior secured credit facility and the mezzanine secured credit facility. As of September 30, 2021, the Company’s senior secured credit facility with financial institution 1 matures within the next twelve months following the date these condensed consolidated financial statements are issued. The Company expects to enter into new financing arrangements or amend existing arrangements to meet its obligations as they come due, which the Company believes is probable based on its history of prior credit facility renewals and an assessment of the current lending environment. The Company believes cash on hand, in addition to the cash the Company obtained as a result of the Business Combination, PIPE Investment and Forward Purchase Agreement, together with proceeds from the resale of homes and cash from future borrowings available under each of the Company’s existing credit facilities or the entry into new financing arrangements will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued. Mezzanine Secured Credit Facilities The Company classifies mezzanine secured credit facilities as current liabilities on the accompanying condensed consolidated balance sheets as amounts drawn to purchase and renovate homes are due as homes are sold, which is expected to be within 12 months. These facilities are structurally and contractually subordinated to the related senior secured credit facilities. The following summarizes certain details related to the Company’s mezzanine secured credit facilities (in thousands):
|  | As of September 30, 2021 |  |  | As of December 31, 2020 |
|  | Borrowing Capacity |  |  | Outstanding Amount |  |  | Borrowing Capacity |  |  | Outstanding Amount |
Mezzanine secured credit facilities |  | $ | 124,700 |  |  | $ | 81,209 |  |  | $ | 68,450 |  |  | $ | 19,251 |
As of September 30, 2021, the Company had three mezzanine secured credit facilities, all of which are with a related party, which holds more than 5% of our Class A common stock. Borrowings for each of the mezzanine secured credit facilities accrue interest at a rate of 13.00% and the mezzanine secured credit facilities have maturity dates ranging from December 2022 through March 2024. These borrowings are collateralized by a second lien on the real estate inventory funded by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse to Offerpad with limited exceptions. When the Company resells a home, the proceeds are used to reduce the outstanding balance under both the related senior secured credit facility and the mezzanine secured credit facility. Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities The secured credit facilities include customary representations and warranties, covenants and events of default. Financed properties are subject to customary eligibility criteria and concentration limits. The terms of these facilities and related financing documents require the Company to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to equity). As of September 30, 2021, the Company was in compliance with all covenants. Senior Secured Debt - Other During July 2021, the Company entered into an arrangement with a third-party lender to support additional purchases of real estate inventory (“Senior Secured Debt - Other”). Borrowings on the Senior Secured Debt - Other accrue interest at a rate based on a Secured Overnight Financing Rate plus a margin of 5.74%. The weighted-average interest rate on the Senior Secured Debt - Other as of September 30, 2021 was 5.79%. Notes Payable In February 2020, the Company entered into a secured promissory note with a lender to finance the Company’s rooftop solar panel systems for a $4.3 million term loan. The note required the Company to make monthly principal and interest payments. The Company repaid $3.8 million on this note in September 2021 in connection with the Closing of the Business Combination transaction, which represented the outstanding balance on the note, together with accrued but unpaid interest. Accordingly, there are no amounts outstanding on this note as of September 30, 2021. The Company had unsecured notes payable of $1.3 million at December 31, 2020 that were included in current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2020. The balance on each note, together with accrued but unpaid interest, was repaid in September 2021 in connection with the Closing of the Business Combination transaction. The Company had unsecured notes payable to related parties of $2.4 million at December 31, 2020 that were included in current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2020. The balance on each note, together with accrued but unpaid interest, was repaid in September 2021 in connection with the Closing of the Business Combination transaction. Secured Term Loan On June 30, 2021, Offerpad entered into a credit agreement (the “First American Credit Agreement”) with First American Title Insurance Company, which is an affiliate of First American, which holds more than 5% of our Class A common stock. Additionally, Kenneth DeGiorgio, who is a member of our board of directors, is the president of First American. Under the First American Credit Agreement, we borrowed a principal amount of $30.0 million. In August 2021, we amended the First American Credit Agreement to borrow an additional $25.0 million. The loan accrued interest at an annual rate of 12.0%. The principal amounts of the loan, together with all accrued but unpaid interest, were repaid in September 2021 in connection with the Closing of the Business Combination. Accordingly, there are no amounts outstanding on this loan as of September 30, 2021.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration