Lennar Corporation Completes Spin-Off of Millrose Properties

Lennar distributed approximately 80% of Millrose's stock to its shareholders through a taxable spin-off, solidifying Millrose's status as an independent publicly traded entity. Each holder of Lennar Class A or Class B common stock, as of January 21, 2025, received one share of Millrose Class A common stock for every two shares of Lennar common stock they owned, with an option to choose Millrose Class B shares in exchange.

As of the distribution date, there are 120,980,401 shares of Millrose Class A common stock and 11,819,811 shares of Class B common stock outstanding. Lennar will temporarily retain 33,200,053 shares of Millrose Class A common stock, representing approximately 20% of Millrose's total outstanding shares, with plans for future disposition.

Lennar contributed substantial assets to Millrose, including $5.5 billion in land assets and $1.0 billion in cash, establishing Millrose's book value of equity at approximately $5.8 billion as of December 31, 2024. In addition, Millrose will have access to approximately $1.3 billion under its revolving credit facility, with potential for an increase to $2.0 billion.

Stuart Miller, Executive Chairman and Co-CEO of Lennar, emphasized the strategic significance of this spin-off, stating, "With today's successful launch of Millrose Properties, we are very excited to advance Lennar's strategy of becoming a pure-play land-light manufacturer of homes." This transaction is expected to enhance Lennar's ability to allocate cash flow more efficiently and focus on its core operations.

Millrose Properties operates as a land acquisition and development company, primarily facilitating the purchase and development of residential land, which it sells back to Lennar and other homebuilders through option contracts. This innovative model positions Millrose to operate with limited entitlement and development risk, providing homebuilders with "just-in-time" access to finished homesites.

Darren Richman, CEO of Millrose Properties, expressed enthusiasm about the new venture, stating, "We are excited to operate Millrose in its mission to facilitate the creation of high-quality residential communities by leveraging our financial expertise and industry relationships." The company anticipates executing and closing accretive third-party deals in the near future, supported by its robust deal backlog.

Millrose is externally managed by Kennedy Lewis Land and Residential Advisors LLC, an affiliate of Kennedy Lewis Investment Management. This partnership will provide Millrose with access to financial expertise and operational support, essential for executing its growth strategy. Several financial institutions, including Citigroup and Goldman Sachs, served as advisors to Lennar during this transition.

The successful spin-off of Millrose Properties from Lennar Corporation marks a significant step in Lennar's ongoing strategy to streamline its operations and enhance shareholder value. As Millrose begins trading independently, the company is poised to leverage its innovative business model to further capitalize on growth opportunities within the residential real estate market. The industry will be watching closely as both companies navigate this new chapter, with expectations for increased efficiency and profitability in the evolving housing landscape.