Fitch assigns Dream Finders BB-

Fitch Ratings said it assigned a BB- long-term issuer default rating to Dream Finders Homes, Inc. The agency also assigned BB-/RR4 ratings to the company's senior unsecured revolving credit facility and its planned offering of senior unsecured notes and B/RR6 ratings to its convertible preferred stock. The outlook is stable.

“The BB- IDR reflects the company's modest leverage, its conservative operating model of acquiring land almost exclusively through option contracts, and an expectation of positive cash flow from operations (CFO) during most periods in a housing cycle. The ratings also reflect the company's limited geographic and product diversification, historically aggressive growth strategy, and concentrated ownership structure,” Fitch said in a press release. Nearly 70% of its revenue is generated in Florida and Texas.

“Fitch expects revenues will grow 3%-5% this year and decline 1%-3% in 2024. Fitch expects EBITDA margins will expand 50 bps-70 bps in 2023 but will fall 25 bps-75 bps in 2024 due to elevated incentives and price adjustments to drive demand,” the agency said.

Dream Finders will use the proceeds to repay borrowings under the revolver.

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