TAYLOR MORRISON HOME CORP: Entering into Material Definitive Agreement (Form 8-K)

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Item 1.01. Conclusion of a significant definitive agreement.

On April 26, 2022, MC BTR Venture LLCa Delaware limited liability company (“Member TM”) and a wholly owned subsidiary of Taylor Morrison Home Corporation (the “Company”), and Vice President Moondance Holdings LLCa Delaware limited liability company (“Värde member”) and an affiliate of Värde Partners, Inc., has established a joint venture (the “Joint Venture”) for the purpose of acquiring undeveloped land on which to construct and operate horizontal apartments (“BTR Projects”) in support of the Company’s build-to-let operations. The terms of business are set forth in this Limited Liability Company Agreement of TMVP BTR Venture, LLC dated April 26, 2022 (the “LLC Agreement”) entered into between the TM Member and the Värde Member. The LLC Agreement provides for an overall combined commitment of $850,000,000 of the TM member and the Värde member, whose commitment will be invested in BTR projects in tranches of $450,000,000 and $400,000,000, respectively. The committed capital will be financed 60% by Värde Member and 40% by TM Member on an equal basis. The investment period for both tranches may extend up to the fourth anniversary of the date on which the company acquires the first
BTR project. During the investment period, the company will be an exclusive vehicle to acquire BTR projects that meet the company’s investment guidelines, which outline geographic markets, minimum target returns, minimum number of units, funding available and other criteria. For every BTR project identified by TM Member that meets these investment guidelines, TM Member has agreed to offer Värde Member the opportunity to acquire and develop the BTR project. If Värde Member decides not to pursue or approve such an acquisition, TM Member or its affiliates will be permitted to acquire ownership outside of Venture. In addition, the TM member will also be required to offer the Värde member the opportunity to acquire and develop BTR projects that meet certain (but not all) investment guidelines if that is the case. BTR project is located within 2.5 miles of a BTR project belonging to the Venture.

The TM Member will serve as the Managing Member of the Business and be responsible for the day-to-day operations of the Business and the management of its properties, subject to obtaining Member Värde’s approval for major decisions (including, without limitation, the acquisition of properties, financing and affiliated transactions). In the event of a material impasse with regard to a BTR projectthe LLC Agreement provides a mechanism whereby these BTR project can be sold after a blocking period of 18 months to one of the TM members, Värde member or to a third party buyer.

In addition to the role of TM Member as managing member, after a BTR project is acquired, a subsidiary of the Company will also manage the construction of the
BTR project (each, a “TM Builder”).

In return for its management services, the TM Member will be entitled to receive deferred interest on distributable cash after the Värde Member recovers its invested capital and meets certain hurdles related to its internal rate of return. The deferred interest for each tranche will be calculated separately and the percentage of deferred interest will vary according to the internal rate of return achieved by Värde Member. Each TM Builder will receive a construction management fee for the construction management services provided by that TM Builder. TM Builder will be liable for a limited category of cost overruns, but such liability will be capped at a percentage of its construction management fee. Currently, Member TM and Member Värde intend to contract an unaffiliated third-party property manager to manage BTR projects after their completion.

The Värde member will have the right to remove and replace the TM member as managing member of the company if the TM member fails to fulfill certain obligations or if certain events occur. Likewise, Värde Member shall have the right to request the company to remove and replace TM Builder as the construction manager of a BTR project if TM Builder fails to perform certain obligations or if certain events occur.

The LLC Agreement contains restrictions on a party’s right to transfer its interest in the business without the other party’s approval. After the fifth anniversary of the date on which the first BTR project is acquired, the TM Member or the Värde Member may choose to force the liquidation of the company, in which case the non-trigger member would have the first right to acquire the portfolio of BTR projects then held by the company.

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