Millrose Properties, Inc. (MRP)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with our accompanying condensed consolidated financial statements and the notes thereto included in “Part I, Item 1. Financial Statements” in this Form 10-Q and the audited consolidated financial statements and the notes thereto included in the Form 10-K. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-Q, particularly under the section titled “Cautionary Statement Concerning Forward-Looking Statements.” The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. See the sections titled “Part I, Item 1A. Risk Factors” in our Form 10-K and “Cautionary Statement Concerning Forward-Looking Statements” herein for a discussion of the risks, uncertainties, and assumptions associated with these statements.

As further described in Note 1. Description of Business to our condensed consolidated financial statements included in “Part I, Item 1. Financial Statements” of this Form 10-Q, we completed the Spin-Off from Lennar on February 7, 2025. The financial information presented herein (i) for the periods prior to the February 7, 2025 Spin-Off is that of the Predecessor Millrose Business and is derived from the consolidated financial statements and accounting records of Lennar, and (ii) for the periods after the February 7, 2025 Spin-Off is that of Millrose and its subsidiaries. Millrose was formed on March 19, 2024 and has operated as an independent company since the Spin-Off on February 7, 2025.

Our Business and Recent Transactions

Millrose is a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose became an independent, publicly traded company on February 7, 2025 following the Spin-Off from Lennar and its Class A common stock is listed on the NYSE under the symbol “MRP”. We purchase and develop residential land and sell finished homesites to homebuilders by way of option contracts with predetermined costs and takedown schedules. We serve as a solution for homebuilders seeking to expand access to finished homesites while implementing an asset-light strategy. As fully developed homesites are sold by Millrose, capital is recycled into future land acquisitions for homebuilders, providing counterparties with durable access to community growth. Our option contracts provide for the payment of recurring option fees paid by our counterparties through the term of the applicable contract. To a lesser extent, we also provide development loans secured by property intended for single-family use to certain third-party counterparties. We are externally managed and advised by KL pursuant to the management agreement entered into on February 7, 2025 between Millrose and KL (the “Management Agreement”).

On March 25, 2026, the Company entered into the Credit Agreement (as defined below) that provides for (i) a four-year Revolving Credit Facility (as defined below) with commitments in an aggregate amount of $1.335 billion, (ii) a DDTL Credit Facility (as defined below) in an aggregate amount of $500 million that may be utilized during the first year following the Effective Date (as defined below), and (iii) an uncommitted accordion feature that allows the Company to seek additional loan commitments under the Credit Agreement in the future, subject to an aggregate maximum commitment amount of $2.5 billion. The net proceeds of the borrowings under the Credit Agreement will be used for general business purposes. Upon the Effective Date, the liens securing the loans under the Company’s prior secured revolving credit facility were released.

On April 1, 2026, the Company received a payoff of approximately $284 million related to one of its development loans with an unaffiliated third party. The payment settled all outstanding principal, accrued interest, and fees associated with the loan. As a result, the Company derecognized the outstanding principal and accrued interest balances related to the development loan from its condensed consolidated balance sheets. In addition, the Company reduced its allowance for credit losses to reflect the removal of the loan from its development loan portfolio.

Invested Capital Activity as of June 30, 2026

Invested Capital is a non-GAAP financial measure that represents the balance on which monthly cash option fees are paid by counterparties. Invested Capital includes certain components of our condensed consolidated financial statements related to (i) homesites under option contracts, (ii) development loans receivable, and (iii) liabilities. The most directly comparable GAAP financial measure is homesites under option contracts as presented in the Company’s condensed consolidated balance sheets. Management uses Invested Capital as a measure of the capital deployed and believes that the figure is useful to investors because it serves as the basis for generating option fees and other related income. This non-GAAP measure is presented solely

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to permit investors to understand how our management assesses underlying performance and is not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

The table below reconciles GAAP reported homesites under option contracts to Invested Capital as of June 30, 2026 and summarizes Invested Capital activity for the three months ended June 30, 2026:

(1)
Includes option fees received from counterparties in the subsequent month.

(2)
Includes (a) homesite under option contracts contributed by Lennar at Spin-Off and acquired from Rausch, less option earning deposits and other holdbacks, and (b) takedown, land acquisition and development funding activity through March 31, 2026.

(3)
Reduction in investment balance for the three months ended June 30, 2026 from (a) homesite takedowns pursuant to option agreements, net of deposit credits adjusted for non-option earning deposits, and (b) repayment of development loans.

(4)
Includes acquisitions of homesites under option contracts, net of option earnings deposits, and development loan funding for the three months ended June 30, 2026.

(5)
Based on average option rate and/or loan interest rate weighted by investment balance, assumes SOFR rate as of March 27, 2026.

(6)
Calculated by multiplying Invested Capital balance at end of period by weighted average yield as of June 30, 2026, adjusted for the number of days in the second quarter 2026.

(7)
Calculated by taking weighted average life per each community weighted by investment balance.

(8)
Calculated by taking months until the final scheduled homesite sale per each community weighted by investment balance.

During the three months ended June 30, 2026, we funded $566 million for land acquisition and development and received $590 million in net takedown proceeds under the Master Program Agreement at a weighted average yield of 8.5%. We funded $555 million for land acquisition and development and received $438 million in net takedown proceeds for Other Agreements during this period at a weighted average yield of 10.6%. On a total portfolio basis, the weighted average yield was 9.2% as of June 30, 2026.

Properties as of June 30, 2026

As of June 30, 2026, our homesite assets consisted of 877 properties (also known as communities) in 30 states across the United States, totaling approximately 143,771 homesites, with an approximate aggregate value of $9.6 billion of homesites under option contracts. Of the homesites owned as of June 30, 2026, we expect the total takedown prices of all homesites to be approximately $16.3 billion, and the total estimated development costs of homesites to be approximately $6.9 billion.

As of June 30, 2026, our property assets are collectively located across 30 U.S. states. Approximately 51% of the property assets are concentrated in three states (California, Florida, Texas) and approximately 42% are located in two strong housing market states: Florida and Texas (where we believe the market has healthy underlying demographic and/or economic trends primarily driven by generally steadily growing population).

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The below table shows the location, number of properties, number of underlying homesites and expected total takedown prices of our properties as of June 30, 2026:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the accompanying consolidated financial statements and the notes thereto included elsewhere in this Form 10-K. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly under the section titled “Cautionary Statement Concerning Forward-Looking Statements.” The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. See the sections titled “Part I, Item 1A. Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the risks, uncertainties, and assumptions associated with these statements.

As further described in Note 1. Description of Business to our consolidated financial statements included in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K, we completed the Spin-Off from Lennar on February 7, 2025. The financial information presented herein (i) for the periods prior to the February 7, 2025 Spin-Off is that of the Predecessor Millrose Business and is derived from the consolidated financial statements and accounting records of Lennar, and (ii) for the periods after the February 7, 2025 Spin-Off is that of Millrose and its subsidiaries. Millrose was formed on March 19, 2024 and has operated as an independent company since the Spin-Off on February 7, 2025.

Our Business

Millrose is a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose became an independent, publicly traded company on February 7, 2025 following the Spin-Off from Lennar and its Class A Common Stock is listed on the NYSE under the symbol “MRP”. We purchase and develop residential land and sell finished homesites to homebuilders by way of option contracts with predetermined costs and takedown schedules. We serve as a solution for homebuilders seeking to expand access to finished homesites while implementing an asset-light strategy. As fully developed homesites are sold by Millrose, capital is recycled into future land acquisitions for homebuilders, providing counterparties with durable access to community growth. Our option contracts provide for the payment of recurring option fees paid by our counterparties through the term of the applicable contract. To a lesser extent, we also provide development loans secured by property intended for single-family use to certain third-party counterparties. We are externally managed and advised by KL pursuant to the Management Agreement.

The Spin-Off and Related Transactions

On the Distribution Date, we completed our Spin-Off from Lennar through a distribution of approximately 80% of Millrose’s outstanding Common Stock to holders of Lennar Common Stock as of the close of business on January 21, 2025. In connection with the Spin-Off, we received a contribution from Lennar of approximately $5.5 billion in land assets, representing approximately 87,000 homesites, and cash of approximately $1.0 billion, which included $585 million of cash deposit liabilities related to option contracts with Lennar.

On February 10, 2025, we completed the acquisition of land consisting of approximately 25,000 homesites through the acquisition of 100% of the outstanding stock of RCH Holdings, Inc., a recently formed parent holding company of Rausch, for approximately $859 million in cash, which is net of option deposits funded by Lennar and other holdbacks.

On October 10, 2025, Lennar exercised its registration rights pursuant to the Registration Rights Agreement and commenced the Exchange Offer. On November 26, 2025, Lennar announced the results of the Exchange Offer through which Lennar accepted an aggregate of 8,049,594 shares of Lennar Class A common stock in exchange for 33,298,754 shares of Class A Common Stock of Millrose. The Exchange Offer was completed on November 28, 2025. As a result, Lennar now owns a de minimis amount of Common Stock following the completion of the Exchange Offer.

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New Home Transaction

On May 12, 2025, the Company entered into a commitment with New Home for Millrose to provide land banking capital of up to $700 million to support New Home’s acquisition of Landsea. On June 25, 2025, New Home completed the acquisition of Landsea and the Company funded land banking capital of $494.5 million at closing for the acquisition of a portfolio of homesites on which the Company executed option agreements with New Home. As a result of the transaction, the Company acquired $522.8 million in land assets, consisting of 4,186 homesites for $494.5 million in cash, which is net of deposits of $28.3 million related to the option contracts.

In connection with the New Home transaction, on June 24, 2025, the Company entered into the DDTL Credit Agreement that provided for a delayed draw term loan facility with commitments in the aggregate amount of $1.0 billion that was scheduled to mature on June 23, 2026. Proceeds of the DDTL Credit Agreement were used to fund the New Home acquisition of Landsea and any remaining proceeds were available for general corporate purposes. On September 11, 2025, the DDTL Credit Agreement was terminated and all obligations thereunder were repaid in full (as further described below).

Senior Notes

On August 7, 2025, the Company completed the offering of $1.25 billion aggregate principal amount of the 2030 Notes (the “August 2025 Offering”). Net proceeds of the August 2025 Offering were used to repay $500 million principal amount outstanding under the DDTL Credit Facility and $450 million principal amount outstanding under the Revolving Credit Facility, and the remainder was used for general corporate purposes.

On September 11, 2025, the Company completed the offering of $750 million aggregate principal amount of the 2032 Notes (the “September 2025 Offering”). Net proceeds of the September 2025 Offering were used to repay the entire $500 million remaining principal amount outstanding under the DDTL Credit Facility, and related expenses. The remainder was used for general corporate purposes.

Invested Capital as of December 31, 2025

Invested Capital is a non-GAAP financial measure that represents the balance on which monthly cash option fees are paid by counterparties. Invested Capital includes certain components of our consolidated financial statements related to (i) homesites under option contracts, (ii) development loans receivable, and (ii) liabilities. The most directly comparable GAAP financial measure is homesites under option contracts as presented in the Company’s consolidated balance sheets. Management uses Invested Capital as a measure of the capital deployed and believes that the figure is useful to investors because it serves as the basis for generating option fees and other related income. This non-GAAP measure is presented solely to permit investors to understand how our management assesses underlying performance and is not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

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Invested Capital Activity for the Year Ended December 31, 2025

The table below reconciles GAAP reported homesites under option contracts to Invested Capital as of December 31, 2025 and summarizes invested capital activity for the year ended December 31, 2025:

(1)
Includes option fees received from counterparties in the subsequent month.

(2)
Includes homesites under option contracts contributed by Lennar at Spin-Off and acquired from Rausch, less option earning deposits and other holdbacks.

(3)
Reduction in investment balance for the year ended December 31, 2025 from (a) homesite takedowns pursuant to option agreements, net of deposit credits adjusted for non-option earning deposits, and (b) repayment of development loans.

(4)
Includes acquisitions of homesites under option contracts, net of option earnings deposits, and development loan funding for the year ended December 31, 2025.

(5)
Based on average option rate and/or loan interest rate weighted by investment balance, assumes SOFR rate as of September 26, 2025.

(6)
Calculated by multiplying Invested Capital balance at end of period by weighted average yield as of December 31, 2025.

(7)
Calculated by taking weighted average life per each community weighted by investment balance.

(8)
Calculated by taking months until the final scheduled homesite sale per each community weighted by investment balance.

During the year ended December 31, 2025, we funded $2.862 billion for land acquisition and development and received $3.168 billion in net takedown proceeds under the Master Program Agreement at a weighted average yield of 8.5%. We funded $2.623 billion for land acquisition and development and received $254.9 million in net takedown proceeds for Other Agreements during this period at a weighted average yield of 11%. On a total portfolio basis, the weighted average

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