Dream Finders Prices $675M Preferred at 12% for Beazer Deal
First closing raised $225 million at a 2.5% discount; the rest waits on the Beazer merger closing at a locked-in 12% cumulative rate.
Dream Finders Homes sold $225 million of newly created Series B convertible preferred stock on September 14 at a 12.00% cumulative annual dividend, with unnamed institutional buyers committed to purchase up to $450 million more once its $2.2 billion Beazer Homes merger clears. The structure, not the merger price, is the news: this is expensive capital, and Dream Finders is paying to lock it in for six years no matter what its stock does.
The first closing sold 225,000 shares at a $1,000 liquidation preference each, for the full $225 million purchase price, with the purchasers taking a 2.50% original issue discount netted out of what they funded. Dream Finders used that money to redeem its existing Series A convertible preferred, with the remainder going to general corporate purposes. A second closing of 450,000 more shares, on the same per-share price and discount, is contingent on satisfying the Beazer merger agreement’s conditions and must close within three business days of that notice, with proceeds earmarked to help fund the deal.
Why it matters
Builders watching the financing market get a real data point: a national top-ten builder with a signed, no-financing-condition merger still paid a 12% cumulative coupon, a 2.5% upfront discount, and a six-year conversion lock to raise acquisition capital privately rather than lean on its credit facility or issue equity outright. That is the price of certainty in a deal this size right now, and it signals investors are charging a real premium for M&A-linked capital even to a well-rated public builder.
The numbers
The dividend is 12.00% annually, paid quarterly starting December 31, 2026. It does not rise on a fixed calendar; it increases 0.50 points the day after the sixth anniversary of the first closing, then another 0.50 points every six months after that, capped at 15.00%. The stock is non-convertible for six years except on a fundamental change or an uncured covenant breach, after which the conversion discount is 25.0% instead of the standard 20.0%. Dream Finders can redeem the preferred starting after year three at 102% of liquidation preference, 101% after year four, and 100% after year five, plus accrued dividends in every case. Each purchaser gets one non-voting board observer seat, and amending terms tied to the credit agreement needs holders of at least 85% of the outstanding preferred.
What’s next
The $450 million tranche does not fund until the Beazer merger’s own closing conditions are met, so its timing tracks antitrust review rather than a fixed date. Dream Finders’ 12% dividend obligation starts accruing well before that tranche arrives, a fixed cost the combined company carries from day one regardless of how the Beazer integration performs.