Dream Finders Homes, Inc. entered into Subscription Agreements on September 14, 2026, with certain institutional investors to sell 225,000 shares of newly created Series B Convertible Preferred Stock. The transaction, known as the First Closing, resulted in an aggregate purchase price of $225.0 million. The shares carry an initial liquidation preference of $1,000 per share and a par value of $0.01 per share. Investors received an original issue discount of 2.50%, which was netted from the purchase price.
The Company intends to use the proceeds from this closing to redeem its existing Series A Convertible Preferred Stock, with any remaining funds allocated for general corporate purposes. A second closing is scheduled to occur on or before the third business day following the Company’s notice that all conditions for a previously announced merger with Beazer Homes USA, Inc. have been satisfied. This second closing involves the sale of an additional 450,000 shares of Series B Convertible Preferred Stock at the same price and discount rate, with proceeds designated to fund a portion of the merger consideration.
The Series B Convertible Preferred Stock is senior to the Company’s Class A and Class B common stock regarding dividends and liquidation rights. Key terms of the preferred stock include a cumulative dividend rate of 12.00% per annum, payable quarterly, which increases by 0.50% annually after the sixth anniversary of the First Closing, subject to a maximum rate of 15.00%. The shares are perpetual but subject to a conversion lock-up period of six years. Following this Non-Convertible Period, holders may convert the stock into Class A common stock at a price equal to the 90-day average closing price less a 20.0% discount, subject to a floor price of $4.19.
Protective covenants are attached to the Series B Preferred Stock. For so long as any shares are outstanding, the Company must comply with the terms of its Amended and Restated Credit Agreement with Bank of America, N.A. Holders of at least 85.0% of the outstanding shares, which must include holders of at least 25.0% held by the Purchasers, are required to approve any material amendments to the Credit Agreement or the Certificate of Designations. Additionally, the Company has a redemption option starting on the third anniversary of the First Closing, allowing it to repurchase shares at 102.0% of the liquidation preference, decreasing to 100.0% after the fifth anniversary, plus accrued dividends.
