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MP

Millrose Properties, Inc. (MRP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 inaugural quarter as a standalone REIT: option-fee revenues and related income were $82.7M; net income attributable to common shareholders was $64.8M; diluted EPS was $0.39; book value per share was $35.40 .
  • Revenue beat Wall Street consensus by 6.5% ($82.7M actual vs $77.6M estimate); EPS consensus for Q1 was unavailable; management raised year‑end quarterly EPS run‑rate guidance to $0.69–$0.71 and lifted 2025 third‑party transaction funding guidance to $1.5B, supported by strong non‑Lennar demand and a new $1B delayed draw term loan .
  • Capital deployment accelerated: $635M redeployed with Lennar and $351M with third‑party builders at 11.7% yields; total portfolio W.A. yield was 8.7% and liquidity was ~$1.1B with $350M debt (5% debt-to-cap) .
  • Dividend framework: paid a pro‑rated $0.38 stub dividend for the period post spin, with a first full quarterly dividend of $0.69 declared for Q2 (payable July 15, 2025), consistent with distributing 100% of earnings .

What Went Well and What Went Wrong

What Went Well

  • Robust demand outside Lennar: $351M deployed with third‑party customers at 11.7% average yields; subsequent events added ~$130M more by May 9, highlighting pipeline strength .
  • Guidance raised on earnings capacity and funding: third‑party transaction funding upped to $1.5B and year‑end quarterly EPS run‑rate raised to $0.69–$0.71; secured $1B delayed draw term loan alongside a $1.3B revolver, expanding dry powder .
  • CEO tone confident on platform value proposition: “The strong demand for our innovative Homesite Option Purchase Platform is driving growth... We believe this approach gives us and our counterparties important visibility in land planning” .

What Went Wrong

  • High customer concentration: >99% of option-fee revenue in the quarter was from Lennar; management acknowledges concentration risk though notes strong counterparty quality and expanding third‑party engagements .
  • Third‑party duration optics: headline W.A. duration cited at ~52 months vs ~31 months for new Lennar deals; management clarified this reflects final takedown dates and that effective lives are about half, with higher deposits and cross‑collateralization mitigating risk .
  • Pre‑spin carve‑out complicates YoY/seq comparisons: Q1 2024 predecessor had no revenue; Q1 2025 includes add‑back for pre‑spin SG&A, limiting period‑over‑period margin analysis .

Financial Results

Consolidated Financials vs Prior Periods and Estimates

MetricQ1 2024 (YoY)Q4 2024 (Seq)Q1 2025Vs. Consensus
Option Fee Revenues & Other Related Income ($USD)$0 n/a (pre‑spin; not standalone) $82.698M $77.648M* (est) → +$5.050M, +6.5%
Net Income Attributable to Common ($USD)$(56.987)M (predecessor) n/a $64.766M n/a (EPS est unavailable for Q1)
Diluted EPS ($USD)n/a n/a $0.39 n/a

Notes:

  • Q4 2024 data are not comparable due to pre‑spin reporting; Millrose became independent on Feb 7, 2025 .
  • Q1 2024 reflects predecessor carve‑out with no option-fee revenues and full‑quarter SG&A .
  • Consensus figures marked with * are from S&P Global; Values retrieved from S&P Global.

Portfolio/Segment Breakdown (Single Operating Segment)

Portfolio MetricLennar Master ProgramThird‑Party AgreementsTotal
Invested Capital (3/31/25) ($USD)$6.363B $0.350B $6.713B
Funding Q1 ($USD)$635M $351M $986M
Wtd. Avg Yield8.5% 11.7% 8.7%
W.A. Duration (final takedown)31 months 52 months n/a

KPIs

KPIQ1 2025
Homesites111,181
Communities876
States29
Total Assets ($USD)$7.2B
Liquidity ($USD)~$1.1B (cash + revolver availability)
Total Debt ($USD)$350M (revolver)
Debt-to-Capitalization~5%
Book Value per Share$35.40
Dividend per Share$0.38 (stub)
Weighted Avg Portfolio Yield8.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Third‑Party Transaction FundingFY 2025≥ $1.0B (Mar 17) $1.5B (May 14) Raised
Quarterly EPS Run‑RateYear‑end 2025$0.67–$0.69 (Mar 17) $0.69–$0.71 (May 14) Raised
EPS (Quarterly)Q2 2025$0.65–$0.68 (Mar 17) n/a in May 14 8‑KMaintained (implicitly)
Dividend PolicyOngoingDistribute 100% of earnings Reaffirmed; declared $0.69 for Q2 Implemented
Leverage FrameworkOngoingMax debt-to-cap 33%; 1:1 debt/equity requires Lennar approval Reaffirmed Maintained
LiquidityOngoing$1.3B revolver +$1B delayed draw term loan Increased

Earnings Call Themes & Trends

TopicPrevious Mentions (Q‑2 and Q‑1)Current Period (Q1 2025)Trend
Non‑Lennar growth & yieldsOutlook to ≥$1.0B 2025 non‑Lennar, 11%+ yields $351M deployed at 11.7%; $130M added post‑Q; stretch goal $2B Accelerating
Capital access/liquidity$1.3B revolver post spin +$1B delayed draw term loan; ~$1.1B liquidity Strengthening
M&A facilitationRausch Coleman land assets completed $700M Landsea/New Home commitment; Millrose “tool in toolbox” Expanding role
Risk management (deposits/pooling)Framework disclosed; pooling within Lennar Higher deposits; cross‑collateralization on some third‑party pools; effective duration ~half of final takedown Conservative
Dividend policy (REIT)100% earnings distribution articulated Reaffirmed on call; declared $0.69 quarterly for Q2 Executed
Macro housing tailwindsStructural shortage (3–5M units) noted Reiterated; big builders gaining share; asset‑light adoption Ongoing tailwinds

Management Commentary

  • CEO: “The strong demand for our innovative Homesite Option Purchase Platform is driving growth and delivering value... We have executed five separate programmatic partnership commitments... provide the builder with defined capital availability… visibility in land planning.”
  • CFO: “We plan to distribute 100% of our earnings back to shareholders… inaugural dividend of $63.1M or $0.38 per share… would equate to $0.65 per share on a normalized quarterly basis.”
  • COO: On Landsea/New Home: “$700M land banking funding commitment… $600M initial funding expected in Q3 2025 and up to $100M subsequent development funding… including a $650M additional equity contribution by Apollo.”

Q&A Highlights

  • Yield expectations: Large transactions (e.g., Landsea/New Home) align with non‑Lennar economics; slight rate give‑up where cross‑collateralization enhances credit .
  • EPS run‑rate build: $1.5B non‑Lennar funding assumed; ~50 bps more conservative on non‑Lennar yields and cost of debt vs Q1 realized .
  • Duration and risk mitigants: Final takedown durations longer for third‑party but effective lives ~half; higher deposits and pooling where appropriate .
  • Capital structure: $1B delayed draw term loan consistent with revolver pricing; corporate‑level security across assets (Lennar and third‑party) .
  • Dividend policy rationale: REIT chosen to repatriate capital; distributing 100% maximizes effective yield to shareholders given limited recycling benefit of residual 10% .

Estimates Context

  • Q1 2025 revenue beat: $82.698M actual vs $77.648M consensus → +$5.050M (+6.5%); Q1 EPS consensus unavailable (company’s first stub quarter post spin) .
  • Q2 2025 context: Street EPS consensus at $0.71*, in line with prior guidance of $0.65–$0.68 and raised year‑end run‑rate to $0.69–$0.71 .
  • FY 2025 context: Revenue consensus ~$602.2M*, EBITDA consensus ~$507.6M*; model updates likely to reflect raised non‑Lennar funding plan and dividend execution .

Values retrieved from S&P Global.

Consensus vs Actual Detail

PeriodRevenue Consensus ($USD)Revenue Actual ($USD)
Q1 2025$77,647,500*$82,698,000

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue beat and guidance raise are consistent with accelerating third‑party adoption of HOPP’R, supporting a higher year‑end EPS run‑rate and a $1.5B 2025 non‑Lennar funding plan .
  • Liquidity enhanced via $1B delayed draw term loan; with ~$1.1B liquidity and modest 5% debt‑to‑cap, Millrose can fund larger commitments (e.g., Landsea/New Home) without stressing leverage targets (33% cap) .
  • Dividend cadence is now quarterly and aligned with 100% earnings distribution; the first full quarterly dividend of $0.69 confirms near‑term earnings capacity and cash conversion .
  • Risk posture remains conservative: higher deposits, cross‑collateralization, and pooling in certain structures; effective durations are shorter than headline final takedown maturities .
  • Customer concentration should moderate over time as third‑party commitments expand; nonetheless Lennar anchor tenancy provides baseline stability and capital recycling .
  • Near‑term estimate revisions: Street models should reflect raised funding guidance, EPS run‑rate, and dividend execution; Q2 consensus EPS aligns with management outlook .
  • Watch catalysts: closing of the $700M Landsea/New Home transaction in Q3, pace of non‑Lennar deployments toward $1.5B–$2.0B stretch target, and continued dividend execution .

Appendix References and Cross‑Checks

  • Revenues/EPS/Book value/dividend: .
  • Portfolio yields and deployments: .
  • Liquidity/debt/leverage: .
  • Customer concentration (>99% revenue from Lennar): .
  • Segment reporting (single segment): .
  • Dividend declarations: stub $0.38 (Mar 17) and $0.69 (Jun 16): .
  • M&A facilitation and commitments: Rausch Coleman acquisition; Landsea/New Home commitment .

Notes on Comparability: Q4 2024 and Q1 2024 were pre‑spin periods for the predecessor carve‑out and are not directly comparable to Q1 2025 standalone results; management added back pre‑spin SG&A to derive net income attributable to common for Q1 2025 .