MIAMI, Feb. 7, 2025
/PRNewswire/ -- Lennar Corporation (NYSE: LEN and LEN.B,
"Lennar"), one of the nation's leading homebuilders, and
Millrose Properties, Inc. (NYSE: MRP, "Millrose"), a
"first-of-its-kind" homesite option purchase platform, jointly
announced today that they have successfully completed the
previously announced taxable spin-off (the "Spin-Off") of Millrose
from Lennar through a distribution of approximately 80% of
Millrose's stock to Lennar's stockholders (the "Distribution").
Prior to the open of trading on the New York Stock Exchange today,
each holder of Lennar Class A or Class B common stock as of the
close of business on January 21,
2025, the record date of the Spin-Off, received one share of
Millrose Class A common stock, unless the holder elected to receive
one share of Millrose Class B common stock, for each two shares of
Lennar Class A or Class B common stock. Fractional shares of
Millrose Class A common stock will be aggregated and sold in the
public market with proceeds distributed pro-rata to Lennar
stockholders who would have been entitled to receive fractional
shares of Millrose Class A common stock. Fractional shares of
Millrose Class B common stock will be rounded down.
As of today, Millrose is an independent publicly traded company
and will begin "regular-way" trading on the NYSE under the symbol
"MRP."
As a result of the Distribution and the elections made by Lennar
stockholders in connection with the Distribution, there are
currently 120,980,401 shares of Millrose Class A common stock
outstanding and 11,819,811 shares of Millrose Class B common stock
outstanding distributed to Lennar stockholders (representing
approximately 80% of the total outstanding shares of Millrose
common stock). Lennar will temporarily retain and not vote
33,200,053 shares of Millrose Class A common stock (representing
approximately 20% of the total outstanding shares of Millrose
common stock), which it expects to dispose of through a subsequent
spin-off, split-off, public offering, private sale or any
combination of these potential transactions. As of the date of the
Distribution, there are 154,180,454 total outstanding shares of
Millrose Class A common stock and 11,819,811 total outstanding
shares of Millrose Class B common stock (166,000,265 total shares
outstanding in the aggregate).
Millrose engages in land purchases, horizontal development and
homesite option purchase arrangements for Lennar and potentially
other homebuilders and developers. In connection with the Spin-Off,
Lennar has contributed $5.5 billion
in land assets and cash of $1.0
billion. After giving effect to the Spin-Off (net of upfront
option deposits from Lennar and third-party transaction costs),
Millrose's book value of equity is approximately $5.8 billion as of December 31, 2024. Following the Distribution,
Millrose will have availability of approximately $1.3 billion under its revolving credit facility,
which may be increased to $2.0
billion if additional lender commitments are obtained in the
future. Millrose intends to elect and qualify to be treated as a
real estate investment trust ("REIT") for federal income tax
purposes.
The Spin-Off transaction accelerates Lennar's longstanding
strategy of becoming a pure-play, asset-light, new home
manufacturing company.
Stuart Miller, Executive Chairman
and Co-Chief Executive Officer of Lennar, said, "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. The spin-off of Millrose Properties is a
significant milestone for Lennar and the industry, and we look
forward to the Millrose team building a Lennar solution, as well as
an entire industry solution, and creating an exceptional, land
banking platform that will drive accretive yield growth as it
expands."
Millrose is externally managed by Kennedy Lewis Land and Residential Advisors LLC
("Kennedy Lewis"), an affiliate of
Kennedy Lewis Investment Management, an institutional alternative
investment firm with over $25 billion
in assets under management.
Darren Richman, Chief Executive
Officer and President of Millrose Properties, Inc., said, "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. Given our already
existing robust backlog of industry assets, we expect to
immediately begin the process of executing and closing accretive
third-party deals."
Kennedy Lewis provides Millrose
access to Kennedy Lewis' deep
financial expertise, extensive operational platforms and strong
homebuilder relationships. Immediately following the Spin-Off,
Kennedy Lewis will leverage its full
resources to deliver its already robust backlog of deals and to
pursue accretive homesite option purchase arrangements with other
third-party homebuilders and developers throughout the industry.
Kennedy Lewis is currently actively
evaluating these potential transactions for suitability for
Millrose using its standard due diligence procedures and expects to
have one or more of such transactions under contract by the time
Millrose announces its financial results for the first quarter of
2025. Millrose expects to utilize its revolving credit facility to
finance these transactions.
Vestra Advisors LLC, Citigroup, Goldman Sachs & Co. LLC and
JPMorgan Chase & Co. are serving as financial advisors to
Lennar. Cleary Gottlieb Steen &
Hamilton LLP, Gibson, Dunn & Crutcher LLP and Goodwin Procter
LLP are serving as legal counsel to Lennar. Akin Gump Strauss Hauer
& Feld LLP and Venable LLP are serving as legal counsel to the
standalone Millrose business. Davis
Polk & Wardell LLP is serving as legal counsel for
Lennar's financial advisors.
Introduction to Millrose Properties, Inc.
Millrose purchases and develops residential land and sells
finished homesites back to Lennar and potentially other
homebuilders by way of option contracts with predetermined costs
and takedown schedules. While Lennar is currently Millrose's only
customer, Millrose anticipates that its "first of its kind" public
vehicle will be attractive to other homebuilders seeking to
implement an asset-light strategy and believes that becoming a
capital source for other homebuilders will provide for accretive
growth to the Millrose platform.
Millrose's assets perform more like work-in-process inventory
versus traditional land bank assets, with limited entitlement and
development risk, and scheduled takedowns that allow homebuilders
to purchase finished homesites just in time for home construction.
As fully developed homesites are acquired, capital is recycled into
future land acquisitions for Lennar and potentially other
homebuilders, providing each customer with uninterrupted access to
capital. Millrose expects to generate recurring income from monthly
option payments pursuant to purchase option contracts with Lennar
(the "Lennar Agreements") and potentially other homebuilders.
Lennar's Acceleration of its Land-Light Strategy
Since 2013, Lennar has been pursuing an asset-light, land-light
strategy to increase strategic flexibility, improve production
efficiencies and enhance shareholder value. Over the years, Lennar
has undergone a significant transformation in its land strategy by
utilizing off-balance sheet vehicles to acquire homesites. It
has developed and refined its Homesite Option Purchase Platform
(the "HOPP'R"), a comprehensive suite of systems and processes used
to operate and manage the large-scale acquisition, financing, and
development of land assets, as it migrates towards a "just in time"
delivery model of fully developed homesites. This strategic shift
has allowed Lennar to successfully reduce its supply of owned
homesites and significantly increase the percentage of controlled
homesites from 19% as of the end of 2013 to 82% as of the end of
2024.
Key Transaction Highlights:
- Creates a new, long-lasting, public capital recycling, finished
homesite program that reduces on-balance sheet land and development
at a lower cost than existing land banks in the private
markets.
- Lennar will now focus exclusively on "just-in-time",
asset-light home production.
- The Spin-Off enhances Lennar's ability over time to reallocate
cash flow from on-balance sheet land acquisition and development
spend towards capital allocation and shareholder
distributions.
- Lennar's return profile is expected to be significantly
improved by increasing its cash flow conversion and return on
equity.
- A first of its kind transaction, the creation of a recycled
land capital vehicle as a separate public company reinforces
Lennar's position as a leading innovator in the housing
ecosystem.
About Lennar
Lennar Corporation, founded in 1954, is one of the nation's
leading builders of quality homes for all generations. Lennar
builds affordable, move-up and active adult homes primarily under
the Lennar brand name. Lennar's Financial Services segment provides
mortgage financing, title and closing services primarily for buyers
of Lennar's homes and, through LMF Commercial, originates
mortgage loans secured primarily by commercial real estate
properties throughout the United
States. Lennar's Multifamily segment is a nationwide
developer of high-quality multifamily rental properties.
LENX drives Lennar's technology, innovation and
strategic investments.
About Millrose
Millrose is an independent, publicly traded company that
engages, through its subsidiaries, in land purchases, horizontal
development and homesite option purchase arrangements, for
Lennar, certain entities with which Lennar has a business
relationship or in which Lennar has an ownership interest, and
potentially other homebuilders and developers.
Forward-looking Statements
This press release contains forward-looking statements,
including, in particular, statements about Lennar's and Millrose's
businesses, plans, strategies and objectives following the
Spin-Off, including the value of Lennar's land assets contributed
to Millrose, Millrose's qualification as a REIT, the
anticipated benefits of the Spin-Off and Lennar's expected return
profile, the Millrose Class A common stock temporarily retained by
Lennar and the ability of Millrose to sign and close on potential
transactions with third-party homebuilders and developers in the
timeline indicated. You can generally identify forward-looking
statements by our use of forward-looking terminology such as "may,"
"can," "shall," "will," "expect," "intend," "anticipate,"
"estimate," "believe," "continue" or other similar words or the
negatives thereof. Assumptions relating to these statements involve
judgments with respect to, among other things, competitive and
market conditions and future business decisions, all of which are
difficult or impossible to accurately predict and many of which are
beyond our control. There can be no assurance that these
forward-looking statements will prove to be accurate, and our
actual results, performance and achievements may be materially
different from that expressed or implied by these forward-looking
statements. In light of the significant uncertainties inherent in
these forward-looking statements, the inclusion of this information
should not be regarded as a representation by us or any other
person that our objectives and plans, which we consider to be
reasonable, will be achieved.
Contact:
Ian Frazer
Investor Relations
Lennar Corporation
(305) 485-4129
SOURCE Lennar Corporation
