Millrose Properties third-quarter net income rises to $130 million, raises outlook

Millrose Properties Inc. (MRP) said Tuesday that third-quarter net income rose to $130.0 million, or $0.78 per share, from $105.1 million, or $0.63 per share, a year earlier, according to a regulatory filing. Total revenues were $211.0 million from option fees and development loan income, up from $179.3 million.

Here's how the company did:

• Net income attributable to common shareholders: $130.0 million, or $0.78 per share, vs. $105.1 million, or $0.63 per share a year earlier
• Revenue: $211.0 million vs. $179.3 million a year earlier
• AFFO: $133.5 million, or $0.80 per share, vs. $122.5 million, or $0.74 per share a year earlier

AFFO, or adjusted funds from operations, is a non-GAAP measure. The company defines it as net income excluding gains on property sales, plus real estate depreciation, adjusted for non-recurring items and certain non-cash items.

For the first nine months, net income attributable to common stockholders was $378.8 million, or $2.28 per share, compared with $282.6 million, or $1.70 per share, a year earlier. Total revenues for the nine months were $602.8 million, up from $411.0 million.

Net income rose 24%, or $24.9 million, from a year earlier and 3%, or $4.1 million, from the second quarter, the company said in its earnings presentation.

Darren Richman, Chief Executive Officer and President of Millrose, said: "Millrose delivered a record third quarter, driven by disciplined underwriting and the resilience and adaptability of our platform in a challenging housing market."

Lennar and other agreements

The Lennar Master Program Agreement produced $596 million in net cash proceeds from homesite sales to Lennar during the quarter. Millrose redeployed $546 million of that into new land acquisitions and development funding.

At Sept. 30, homesites under option contracts with Lennar totaled $6.3 billion. The Lennar Invested Capital balance was about $5.9 billion, with a weighted average yield of 8.5%.

Under Other Agreements, Millrose funded an additional $714 million at a weighted average yield of 10.8%. Homesites under option contracts and other related assets reached $3.8 billion, and Invested Capital net of realized homesite sales reached $3.4 billion, up about $521 million from the prior quarter.

The company said it has 22 homebuilder and developer counterparties, 21 of them outside Lennar. At quarter end it held 156,729 homesites across 834 communities in 30 states, with a total portfolio weighted average annualized yield of 9.3%.

Dream Finders and Beazer financing

Millrose finalized about $1.1 billion of capital support for Dream Finders Homes' acquisition of Beazer Homes. The filing said the acquisition closed Oct. 20, and the capital support was effective that day.

About $580 million, net of option deposits received, is land banking capital covering about 7,000 homesites. More than half are finished, with a weighted average life of about 2.5 years.

About $488 million, net of original issue discount, is preferred equity in Dream Finders carrying a 12% dividend. Of that, $171 million was funded Sept. 14, 2026, and $317 million at closing. Pro forma for the transaction, about 42% of Millrose's asset base is invested outside the Lennar Master Program Agreement.

Single-family rental purchase

Millrose acquired 1,233 completed single-family homes from Lennar across 18 states, for an aggregate cost basis of about $333 million. The purchase was funded with about $120 million of balance sheet capital, net of $213 million of limited-recourse secured financing. The filing said the homes were underwritten as a standalone rental investment, independent of any future path-to-homeownership initiative.

Guidance, buyback and dividend

The company raised its guidance for year-end 2026 AFFO quarterly run rate to a range of $0.82 to $0.84 per share. The filing does not state the previous range. It said it cannot reconcile the run rate to the most comparable GAAP measure without unreasonable efforts, because the timing of future items is difficult to forecast.

The board authorized a $250 million share repurchase program for Class A common stock on Oct. 26, the 8-K said. Repurchases may be made in the open market or in privately negotiated transactions, and the company is not obligated to buy any specific number of shares.

Richman said: "We have raised our outlook for the remainder of the year and authorized our first share repurchase program, reflecting our confidence in the durability of our cash flows and our commitment to disciplined capital allocation."

On Sept. 23, the company declared a quarterly dividend of $131.2 million, or $0.79 per share. It was paid Oct. 15 to holders of record as of Oct. 5.

Balance sheet

As of Sept. 30, total assets were $10.6 billion and total liquidity was $0.8 billion, including cash and availability under its revolving credit facility. Corporate debt was $3.1 billion, with a debt-to-capitalization ratio of 36%.

In September, the company priced $1.0 billion of senior notes in two tranches: $500 million of 6.500% notes due 2029 and $500 million of 6.750% notes due 2031. Its earnings presentation said that offering was completed after Sept. 30.

Management fee expense was $30.3 million in the quarter, and interest expense was $47.1 million, up from $43.7 million a year earlier.