Millrose Properties (MRP 3.10%), a leading real estate capital provider specializing in land banking and funding solutions for homebuilders, released its Q2 2025 results on July 31, 2025. The results showed AFFO (non-GAAP) per share of $0.69, falling slightly short of analyst estimates of $0.71 non-GAAP EPS, while reported revenue (GAAP) was $149.0 million, exceeding analyst expectations. The company’s operational quarter highlighted strong progress on strategic initiatives such as customer diversification and platform expansion, and it declared its first full quarterly dividend. Overall, the quarter reflected continued growth momentum, with some caution surrounding a modest earnings miss and ongoing reliance on key partners.
Business Overview and Strategy
Millrose Properties operates as a specialized financial partner for homebuilders, enabling land acquisition and development through innovative capital solutions. The company’s platform centers on Homesite Option Purchase Platform (HOPP'R), which gives homebuilders access to recycled funding for land purchases, a model that seeks to offer stable returns and continuous capital flow. This approach aims to set Millrose apart from traditional land banking providers by offering a more dynamic and capital-efficient solution.
In recent quarters, Millrose has focused on expanding its partnerships with companies outside its historical customer base, namely Lennar. Broadening and diversifying its list of homebuilder and developer clients has become a top priority, as leadership seeks to reduce reliance on any single account. Efficiency in capital recycling and risk management remain essential success factors, as does progress toward Real Estate Investment Trust (REIT) status, with its associated tax and dividend benefits.
Quarter in Review: Notable Developments and Performance
Though the $0.69 per share in AFFO (non-GAAP) did not meet the analyst estimate of $0.71, the shortfall was modest. Management explained that net income attributable to common shareholders reached $112.8 million (GAAP), with revenue (GAAP) of $149.0 million nearly matching expectations. The results were underpinned by $149.0 million in option fees and related income earned through land and homesite funding arrangements.
In Q2 2025, the company’s Recycled Capital Model continued to perform strongly, generating $797 million in net cash proceeds from homesite sales and rapidly redeploying proceeds. Most of this capital came through transactions with its longstanding partner, Lennar. Millrose recycled $768 million from homesite sales to Lennar and redeployed $718 million into new land acquisitions and development funding tied back to Lennar. The weighted average rate on new deals with Lennar was 8.6%, supporting ongoing strong yields within this core portfolio.
While Lennar remains the foundational customer, the period featured clear progress in diversification. Millrose deployed $813 million with third-party homebuilders at a weighted average yield of 11.2%, boosting total third-party invested capital (non-GAAP) to $1.1 billion as of Q2 2025, up from $349.6 million as of Q1 2025. Notable new deals included major land and construction funding for companies like New Home Company (approximately $500 million) and Taylor Morrison (recently announced $3 billion facility, with the majority expected to be allocated to Millrose). By the end of Q2 2025, the portfolio spanned approximately 129,000 homesites across 1,000 communities in 29 states, and the total portfolio yield was 8.9%, up from 8.7% in Q1 2025.
Financial leverage remained conservative: total liquidity stood at $1.4 billion as of Q2 2025, with a debt-to-capitalization ratio of 15% as of Q2 2025, well below its 33% stated maximum. Additional balance sheet flexibility came from a new $1 billion delayed draw term loan and a $1.3 billion revolving credit facility, providing ample resources for future growth. Importantly, the company launched its first regular quarterly dividend of $0.69 per share, reflecting its new REIT-aligned payout policy and intention to return essentially all of its recurring profits to shareholders. The dividend sets the stage for Millrose’s full transition to REIT status by the end of the year.
Business Lines, Markets, and Product Family Details
The core offering from Millrose is its HOPP'R capital solution, which acts as a financial structure for land option purchases, allowing homebuilders to lock in future home sites. This approach, known as land banking, enables clients to develop housing without needing to fully deploy their own funds upfront. Portfolio-wide, yields outside the Lennar agreement were 11.2% on new third-party deals compared to 8.5% in arrangements with Lennar.
Millrose expanded partnerships with the New Home Company and Taylor Morrison. These relationships saw Millrose facilitating major land banking and construction deals: a $500 million commitment supporting New Home Company's acquisition of Landsea Homes, and an announced $3 billion land and construction financing facility provided to Taylor Morrison’s Yardly build-to-rent platform by an affiliate of Millrose’s Manager, with the majority expected to be allocated to Millrose. The higher returns achieved in these third-party segments contributed to a higher total portfolio yield.
Outlook and Guidance
Looking ahead, management raised its guidance for Adjusted Funds From Operations (AFFO, non-GAAP) to a quarterly run-rate of $0.70 to $0.73 per share for year-end 2025, citing continued progress in deals with clients outside the Lennar program. This updated range is intended to give investors clearer insight into the company’s underlying distributable cash flows, particularly as the business grows and diversifies. Management did reaffirm plans to qualify for REIT status by year-end 2025, consistent with previous disclosures.
The quarterly dividend was raised to $0.69 per share. With this payout, Millrose now distributes 100% of its earnings to shareholders. Investors are likely to follow the rate of third-party customer growth, further shifts in portfolio yields, and any potential changes in Millrose’s relationship with Lennar closely, as these elements will determine the pace and sustainability of the company’s ongoing expansion.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
