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MP

Millrose Properties, Inc. (MRP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong cash-generation with Revenues of $179.3M and GAAP EPS of $0.63; revenue was modestly above consensus while EPS was slightly below due to non-recurring debt financing costs that management adjusts in AFFO calculations . Revenue cons.: $177.6M*, EPS cons.: $0.635*.
  • AFFO was $122.5M ($0.74/share), and the dividend was raised to $0.73/share; management reaffirmed distributing 100% of AFFO and increased year-end AFFO quarterly run-rate guidance to $0.74–$0.76 per share .
  • Liquidity and balance sheet were significantly strengthened via $2.0B of senior notes (6.375% due 2030; 6.25% due 2032), retiring short-term bridge debt and expanding total liquidity to ~$1.6B; debt-to-cap ratio is ~25% with a 33% self-imposed cap .
  • Strategic momentum: invested capital outside the LENR master program grew to ~$1.8B; platform now spans ~139k homesites across 876 communities in 30 states, and counterparties expanded to 12, underpinned by a proprietary technology platform and disciplined underwriting .

Values with asterisk are from S&P Global; “Values retrieved from S&P Global”.

What Went Well and What Went Wrong

What Went Well

  • Technology moat and operational scale: “Our proprietary technology platform… enables us to manage nearly 140,000 home sites, automate transaction management, and leverage AI for unique market insights” .
  • Balance sheet optimization and market access: Achieved three agency ratings (including one investment grade) and raised $2B of long-term notes at “highly accretive rates,” eliminating near-term refinancing risk and opening ~$1.6B of liquidity .
  • Guidance raised and dividend increased: Year-end AFFO run-rate raised to $0.74–$0.76 per share, FY2025 “other agreements” funding target increased to $2.2B; quarterly dividend increased to $0.73/share and commitment to distribute 100% of AFFO reaffirmed .

What Went Wrong

  • EPS slightly below consensus due to one-time, non-recurring debt issuance and accelerated amortization costs; GAAP EPS of $0.63 vs $0.635* consensus, with $11.8M accelerated amortization recorded in interest expense that is added back in AFFO . EPS cons.: $0.635*.
  • Small CECL provision ($0.34M) on development loan receivables required under GAAP, reflecting conservative accounting rather than actual expected credit loss .
  • Continued macro affordability headwinds in select markets (flagged prior quarter), requiring stringent underwriting and market surveillance—even as overall portfolio exposure was minimal and mitigated by pooling .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$82.698 $149.0 $179.3
GAAP Net Income ($USD Millions)$64.766 $112.8 $105.1
GAAP Diluted EPS ($USD)$0.39 $0.68 $0.63
AFFO ($USD Millions)—$115.0 $122.498
AFFO EPS ($USD)—$0.69 $0.74
Book Value Per Share ($USD)$35.40 $35.39 $35.29
Weighted Average Yield (%)8.7% 8.9% 9.1%

Estimates vs. Actuals (Q3 2025)

MetricConsensus EstimateActualSurprise
Revenue ($USD Millions)$177.562*$179.260 +$1.698M (beat)
GAAP EPS ($USD)$0.635*$0.63 -$0.005 (miss)

Values with asterisk are from S&P Global; “Values retrieved from S&P Global”.

Segment/Program Breakdown and Yield

MetricQ1 2025Q2 2025Q3 2025
Invested Capital – Master Program Agreement ($USD Billions)$6.363 $6.274 $6.336
Invested Capital – Other Agreements ($USD Billions)$0.350 $1.134 $1.817
Weighted Avg Yield – Master (%)8.5% —8.5%
Weighted Avg Yield – Other (%)11.7% 11.4% 11.3%
Portfolio Weighted Avg Yield (%)8.7% 8.9% 9.1%

KPIs and Capitalization

KPIQ1 2025Q2 2025Q3 2025
Homesites (#)111,181 —~139,000
Communities (#)876 876 876
States (#)29 30 30
Counterparties (#)—11 12
Total Assets ($USD Billions)$7.2 ~$8.0 ~$9.0
Total Debt ($USD Billions)$0.35 $1.00 $2.00
Debt-to-Capitalization (%)~5% ~15% ~25%
Total Liquidity ($USD Billions)~$1.1 —~$1.6
Dividend Per Share ($)$0.38 $0.69 $0.73

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AFFO Quarterly Run-Rate per ShareYear-end 2025$0.70–$0.73 $0.74–$0.76 Raised
New Transaction Funding (Other Agreements)FY 2025$2.0B base case (raised from $1.5B in Q1) $2.2B Raised
Dividend per ShareQuarterly$0.69 $0.73 Raised
Max Debt-to-CapitalizationOngoing33% 33% Maintained

No explicit revenue, margin, OpEx, OI&E, or tax rate guidance was provided; management emphasized AFFO distribution policy and conservative leverage posture .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Technology/AI platformEmphasis on systems and data-driven underwriting; MSA risk rating model and market surveillance Detailed showcase of proprietary platform scale, AI-driven insights, and transaction velocity; 3,500+ transactions in Q3 Strengthening moat
Capital redeploymentFlywheel demonstrated with LENR takedowns and redeployment; growing third-party investments $852M takedown proceeds, $858M redeployed with LENR; $770M funding outside LENR Accelerating
Counterparty expansion11 counterparties as of Q2 Increased to 12 counterparties Expanding
Yield/portfolio mixBlended yields rising (8.7%→8.9%); non-LENR yields >11% Portfolio yield 9.1%; non-LENR yield 11.3% Improving
Ratings and debt market accessNew $1B delayed draw term loan (Q2) Secured 3 agency ratings (incl. investment grade) and issued $2B notes; liquidity ~$1.6B Balance sheet upgrade
Build-to-rent (Yardly)Partnership announced; allocation policy described; yields expected to compress with credit enhancements Ramp progressing; acknowledged contribution within third-party funding, terms analogous to for-sale contracts Scaling use case
Macro/affordabilityHeadwinds flagged in Florida/Texas secondary MSAs; pooling and minimal exposure “Business as usual” with builders; contractual flexibility but no unusual accommodations Stable execution

Management Commentary

  • “Our proprietary technology platform… enables us to manage nearly 140,000 home sites, automate transaction management, and leverage AI for unique market insights” .
  • “We successfully completed $2 billion in senior note offerings… eliminating near-term refinancing risk… and provide approximately $1.6 billion in total liquidity” .
  • “Based on our momentum, we are raising our guidance for year-end AFFO run rate to $0.74 to $0.76 per share and increasing our full year 2025 new transaction funding target under other agreements to $2.2 billion” .
  • “We remain committed to distributing 100% of our AFFO to shareholders” .
  • On builder behavior: “We really haven’t seen any change… it really has been sort of business as usual for us” .

Q&A Highlights

  • Guidance math and deployment cadence clarified: FY2025 “other agreements” funding revised to $2.2B implies ~$400M more from $1.8B YTD—not a $200M delta; no activity slowdown; ample runway before contemplating equity issuance .
  • Credit risk and CECL: No history of counterparties walking away; CECL provision ($0.34M) reflects required GAAP methodology, not expected losses .
  • Ratings and capital markets: Achieved Fitch/S&P/Moody’s ratings (incl. one investment grade); $2B bonds viewed as accretive, a competitive advantage enabling ~$1.6B liquidity .
  • Contract flexibility: Builders exercising contractual extensions within allowances; Millrose open to accommodations if capital not otherwise needed; no abnormal pauses with LENR .
  • Yardly build-to-rent: Material contributor in third-party activity; contracts structured similarly to for-sale, with confidence in counterparty takeout .

Estimates Context

  • Q3 2025: Revenue beat and slight EPS miss vs S&P Global consensus due to non-recurring financing costs (added back in AFFO); Revenue $179.3M vs $177.6M*, EPS $0.63 vs $0.635* .
  • Forward estimates imply continued growth: Q4 2025 revenue $189.9M*, EPS $0.743*; Q1 2026 revenue $198.4M*, EPS $0.777*—consistent with raised AFFO run-rate guidance .
MetricQ3 2025Q4 2025Q1 2026
Revenue Consensus Mean ($USD Millions)177.562*189.919*198.357*
Primary EPS Consensus Mean ($USD)0.635*0.743*0.777*
EBITDA Consensus Mean ($USD Millions)143.112*162.400*168.579*
Target Price Consensus Mean ($USD)39.50*39.50*39.50*

Values with asterisk are from S&P Global; “Values retrieved from S&P Global”.

Key Takeaways for Investors

  • Portfolio scaling with disciplined underwriting and credit protections (cross-termination pooling), while yields remain attractive (11.3% in other agreements, 9.1% blended) .
  • Balance sheet risk reduced materially via terming out debt; liquidity ~$1.6B supports continued redeployment and selective partner expansion toward 12 counterparties .
  • Dividend growth and raised AFFO run-rate guidance should support income-focused demand; watch for sustained AFFO distribution at $0.74–$0.76/quarter by year-end .
  • Near-term trading catalysts: affirmation of “other agreements” funding trajectory ($2.2B) and evidence of Yardly build-to-rent ramp; monitor Q4 deployment pacing and any incremental ratings/financing actions .
  • EPS comparables may continue to reflect GAAP noise (financing amortization, CECL), making AFFO the key metric for distributable earnings and dividend capacity .
  • Macro watchpoints: affordability and localized market softness (prior-quarter flags) remain under surveillance, but management reports “business as usual” execution with builders in Q3 .
  • Medium-term thesis: scaled, asset-light institutional land banking with proprietary tech and national reach positions MRP as a preferred permanent capital partner to builders; disciplined leverage (≤33%) preserves flexibility for growth .