Millrose Properties, Inc. Q3 FY2025 earnings call

• Capital deployment: Generated $852M net cash from homesite sales, redeployed $858M with Lennar and $770M outside, with invested capital outside Lennar at $1.8B and assets totaling $2B.
• Technology platform: Proprietary tech manages ~140,000 homesites, automates transactions, uses AI for insights, enabling scale and agility.
• Risk management: Disciplined underwriting, risk mitigation via deposits and pooling, strengthened balance sheet with $2B senior note offerings, liquidity ~$1.6B, debt to capitalization 25%.
• Partnerships: Partner with 12 counterparties, with a national reach of 139,000 homesites in 30 states.

In the third quarter, Millrose generated $852 million in net cash proceeds from homesite sales, including $766 million from Lennar. They redeployed $858 million in new land acquisitions and development funding with Lennar and $770 million outside the Lennar Master Program Agreement. Invested capital outside Lennar reached $1.8 billion with homesite inventory and other related assets totaling $2 billion at a weighted average yield of 11.3%. The portfolio spans approximately 139,000 homesites across 876 communities in 30 states.

• Raised full year 2025 new transaction funding under other agreements to $2.2B, up from previous.
• Raised year-end AFFO quarterly run rate to a range of $0.74 to $0.76 per share.

• GAAP required CECL estimate for potential credit losses, which is a required adjustment and not an indication of actual expectations.
• Potential market challenges affecting homebuilder activity, though management sees continued demand.

Q: Your new deployment guidance of $2.2 billion implies just another $200 million of deployment in the fourth quarter. Is this a reflection of a pullback in activity from homebuilders or seasonality?

A: Yes, sure. Just a quick correction: invested capital outside Lennar Master Program Agreement was $1.8B as of end of third quarter, revised target is $2.2B, which is based on strong continued demand from builders with no slowdown, just best guess based on current position.

Q: You've had very little credit loss since launch. How do you think about long-term credit loss?

A: In history of land banking experience, no homebuilder walkaway or renegotiation yet. Comes down to underwriting standards, technology, and due diligence screening. Also, counterparties are partners looking for capital efficiency. GAAP required CECL estimate is just a required adjustment.

Q: For the $770 million deployed outside of Lennar, were there new relationships?

A: Last quarter had 11 distinct counterparties, added 1 this quarter, mostly further penetration in existing partnerships.

Q: Changing gears, did Lennar's slowing volume translate to pause with Millrose?

A: Not outside of contractual provisions. Any adjustments done within contractual allowances.

Q: You booked rating agency expenses. You're already rated. What's the time frame for rating and impact on debt cost?

A: Already rated by Fitch, S&P, Moody's. Achieved 3 ratings including investment-grade, which strengthened balance sheet and liquidity.