Millrose Properties NYSE: MRP reported third-quarter 2026 net income of approximately $130 million, or $0.80 per diluted share, as recurring option fee income rose with the company’s invested capital base. Adjusted funds from operations, or AFFO, totaled approximately $133.5 million, also $0.80 per share.
The company said it expects fourth-quarter AFFO of $0.82 to $0.84 per share and an annualized year-end AFFO run rate above the $3.30 per-share guidance it provided after 2025. Chief Executive Officer and President Darren Richman said the outlook would mark Millrose’s sixth consecutive quarterly AFFO increase.
“Our core business continues to perform remarkably well in the face of a challenging housing market and elevated interest rates,” Richman said. He added that, as of Sept. 30, no Millrose customer had walked away from an agreement.
Portfolio Growth and Dream Finders Financing
Millrose ended the quarter with about 157,000 homesites across 834 communities in 30 states, serving 22 distinct counterparties. The company received approximately $800 million in net repayment proceeds from homesite takedowns and development loan repayments during the quarter, while funding about $1.3 billion in new investments and development funding.
Invested capital outside the Lennar Master Program Agreement increased by $521 million during the quarter to approximately $3.4 billion, excluding build-to-rent investments. Chief Operating Officer Robert Nitkin said other agreements generated a weighted average yield of about 10.8%, up from 10.6% in the previous quarter. The company expects that average yield to reach about 11% in the fourth quarter based on rates and transactions closed to date.
On Oct. 20, Millrose funded approximately $1.1 billion in connection with Dream Finders’ acquisition of Beazer Homes. The financing included about $580 million in land banking funding, net of option deposits, and $488 million for Dream Finders preferred stock, net of original issue discount.
The land banking component covered roughly 7,000 homesites, more than half of which were finished lots, with a weighted average life of approximately two and a half years. The preferred investment carries a 12% dividend, in addition to original issue discount and commitment fees, according to Nitkin.
Following the transaction, approximately 42% of Millrose’s asset base was invested outside the Lennar Master Program Agreement. Nitkin said the shorter duration of acquired M&A portfolios can support faster capital recycling and provide a mechanism for reducing leverage after major transactions.
Rental Housing Pilot Remains Under Review
Management spent much of the call addressing its recently disclosed rental housing initiative. Beginning Aug. 28, Millrose purchased 1,233 completed single-family homes across 18 states for an aggregate cost basis of approximately $333 million, including capital expenditures and transaction costs. The company said its net investment was about $120 million after financing proceeds.
Millrose also entered community build-to-rent contracts involving an expected $150 million of gross purchases, supported by an anticipated $100 million of asset-level limited-recourse financing and approximately $50 million of net future investment. Evergreen Residential is handling leasing and property management for the homes.
Richman said the investments were intended to test rental operations, financing structures and consumer behavior as a prerequisite to a possible future bridge-to-homeownership or rent-to-own product. He emphasized that the initial portfolio was not itself a rent-to-own pilot and was not intended to make Millrose a large-scale owner and operator of rental homes.
“This was always intended to be a crawl, walk, run strategy,” Richman said, describing the current stage as an observation period before determining whether a broader institutional financing solution is warranted.
Nitkin said the portfolio was underwritten on standalone rental economics rather than on eventual home sales. Millrose’s base case assumes an approximately 5% initial capitalization rate, 3% annual net operating income growth and an unlevered internal rate of return of about 8%. With leverage modeled at 65% loan-to-cost and an interest rate of SOFR plus 120 basis points, projected levered returns were approximately 10% to 12%.
The company had funded $213 million of asset-level limited-recourse debt against the rental assets. Management said it expects roughly six months to lease the portfolio and that fourth-quarter guidance includes the carrying costs associated with the homes. Richman said roughly 10% of the portfolio had been leased and rents were pacing about 10% above underwriting assumptions.
Dividend, Buybacks and Balance Sheet
Millrose declared its sixth straight quarterly dividend increase, raising the quarterly dividend to $0.79 per share, or approximately $131.2 million in aggregate. Rosenblum said the dividend remained fully covered by recurring AFFO.
At quarter-end, book value per share was $35.24, total assets were approximately $10.6 billion and invested capital was approximately $9.2 billion. Debt-to-capitalization was about 36%.
In September, Millrose issued $1 billion of senior unsecured notes, consisting of $500 million of 6.5% notes due in 2029 and $500 million of 6.75% notes due in 2031.
The board also authorized a $250 million share repurchase program. Richman said that while shares trade below book value, Millrose intends to distribute 90% of earnings, consistent with maintaining REIT status, and direct the remaining portion toward repurchases. However, management later clarified that it does not intend to reduce the current dividend payment and may fund repurchases from incremental earnings and unused capital priority rights associated with Lennar.
Richman said Millrose would not borrow money, compromise liquidity or increase leverage specifically to fund buybacks. He added that the company expects future homesite takedown proceeds to help reduce leverage toward its approximately 33% debt-to-capital target after the Dream Finders financing, while retaining flexibility to temporarily exceed that level for acquisition-related opportunities.
About Millrose Properties (NYSE:MRP)
Millrose Properties, Inc is a residential land acquisition and development company focused on providing finished residential lots to homebuilders. Its business involves acquiring land, securing necessary entitlements, and completing infrastructure and other improvements needed to prepare properties for home construction.
The company generally operates through land-banking arrangements and related development agreements with homebuilders. Millrose may own or control land during the development process and subsequently sell finished lots to builders, helping homebuilders access development-ready sites while reducing the time and capital required for land preparation.
Millrose was established in connection with Lennar Corporation's separation of its residential land and lot development operations and began trading as an independent public company in 2025.
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