Millrose Properties Expands Footprint with Rausch Coleman Land Acquisition

Millrose Properties, Inc. (NYSE: MRP), a first-of-its-kind Homesite Option Purchase Platform for residential homebuilders, has completed the acquisition of approximately 24,000 homesites from Rausch Coleman Homes. This strategic move allows Millrose to expand its footprint into new markets and strengthen its position as a capital source for homebuilders seeking an asset-light strategy.

The acquisition, valued at approximately $900 million in cash, was funded using Millrose's cash on hand. After the closing, Millrose retains approximately $1.3 billion in available funding capacity under its revolving credit facility. This transaction follows a previously announced definitive agreement between Lennar Corporation (NYSE: LEN) and Rausch Coleman, under which Lennar acquired Rausch Coleman's homebuilding operations.

With this acquisition, Millrose has expanded its presence into new markets in Arkansas (Bentonville/Fayetteville, Little Rock, and Jonesboro), Oklahoma (Tulsa and Stillwater), Alabama (Birmingham and Tuscaloosa), and Kansas/Missouri (Kansas City). Additionally, Millrose has strengthened its position in existing markets, such as Texas (Houston and San Antonio), Oklahoma (Oklahoma City), Alabama (Huntsville), and Florida (Gulf Coast).

Darren Richman, CEO and President of Millrose, stated, "Today, we successfully completed the previously announced acquisition of Rausch Coleman homesites, as detailed in the Registration Statement related to Millrose's spin-off from Lennar. With this milestone achieved, we are now focused on advancing our accretive growth strategy and expanding our counterparties across the industry."

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. Kennedy Lewis provides Millrose access to its deep financial expertise, extensive operational platforms, and strong homebuilder relationships.

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. Becoming a capital source for other homebuilders can provide 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 and potentially other homebuilders.

In conclusion, Millrose Properties' acquisition of Rausch Coleman's land assets aligns with its asset-light strategy and expands its footprint into new markets. This strategic move positions Millrose as a capital source for homebuilders seeking to implement an asset-light strategy, providing accretive growth opportunities for the company and its shareholders.