Now one for the books, the 2025 homebuilding market slowed in new construction, resulting in contract cancellations and reduced takedown activity.
Millrose Properties, whose epic scale and timing launched a new era in land banking and asset-light homebuilding development in early 2025, bucked that trend.
Millrose – which began spinning out from Lennar in December 2024 – once again grew its revenue last quarter as it continues to deploy more capital and expand its homebuilder partnerships beyond its foundational connection to Lennar.
Despite a headwinds-laden homebuilding environment, where new home starts fell by about 7.0% nationally last year, Millrose reported that no builder walked away from a contract in 2025.
Many builders reduced their lot exposure last year to boost margins and liquidity. But Millrose, in its first year independent of Lennar, relied on strategic risk management and selective yet consistent partnership expansion to drive growth.
“2025 was not an easy year for the home building industry, and that is precisely what made it such a meaningful proof point for Millrose,” CEO and President Darren Richman said during a Q4 2025 earnings call. “2025 proved the model. 2026 is where we intend to begin showing its full potential.”
Diving deeper into Q4 2025 and full-year 2025 operational and financial performance metrics, here’s a look at how Millrose navigated a successful quarter and how the company plans to grow in the year ahead.
A deeper look at the Millrose model and risk mitigation
Millrose acquires, retains and develops residential land, allowing homebuilders to secure control of homesites through option agreements rather than purchasing the land outright. These agreements enable a land-light strategy, supporting a nimbler, capital-efficient operating model.
Builders pay option fees to secure the right to acquire completed homesites on a set schedule. In exchange, they can strategically scale land positions while keeping debt and capital requirements in check.
For risk mitigation, Millrose structures agreements with large deposits and cross-termination pooling mechanisms that combine multiple land agreements into a single pool. Therefore, if a builder cancels on one property, it triggers penalties or deposit forfeitures across the entire pool of properties.
This cross-termination pooling structure, which covers nearly all of Millrose’s investment balance, is a key risk-mitigation technique. Executives cite this safeguard as a reason no partners walked away from a deal despite a difficult homebuilding market.
“It does not prevent a builder from walking away from an option contract. What it does is raise the cost of doing so, creating a meaningful economic disincentive that protects the integrity of the relationship without eliminating the builder’s optionality,” Robert Nitkin, Millrose’s COO, said.
Executives also highlighted the geographic diversity of the Millrose portfolio, which spans 30 states and 933 communities. This means they are not dependent on a single market or region’s performance.
Millrose also maintains a proprietary data set built from its deal flow, transactions and builder sales reports, which strengthens due diligence. The trio of speed, reliable capital, and close builder collaboration gives Millrose an upper hand in closing and executing deals, executives say.
Millrose’s approach to selecting homebuilding partners
After Millrose split off from Lennar, the two parties established the Lennar Master Program, under which Millrose acquires land and grants Lennar options to purchase homesites on the acquired properties.
The Lennar Master Program agreement laid the foundation for Millrose, with $6.5 billion in homesite inventory and a $6.1 billion capital balance as of the end of December. However, the company continues to diversify further.
Invested Capital, separate and distinct from the Lennar Master Program Agreement, ended in 2025 at about $2.4 billion, and Millrose expects to increase that figure by an additional $2 billion in 2026.
As a result, Millrose continues to expand its homebuilding counterparties beyond the Lennar Master Program, increasing from 12 to 15 partnerships between Q3 and Q4. Even with this expansion, the company remains selective about the partners it chooses.
Nitkin explained that they partner with homebuilders seeking capital efficiency, not risk mitigation. This is because Millrose’s business model is built to optimize capital deployment, not to insulate builders from market risk.
Selecting builders that align with their mission is a key factor in mitigating risk because those partners are less likely to walk away from a contract.
The cross-termination pooling structure also enables Millrose to weed out potential partners that may not be a good fit, as Nitkin described the protocol as a “relationship-defining mechanism”.
“These are builders who understand our model, embrace the off-balance sheet structure and are committed to a long-term programmatic relationship,” Nitkin explained.
Executives previously gave a shout-out to Taylor Morrison’s Yardly BTR brand as an example of a builder that Millrose seeks to partner with.
How Millrose plans to execute growth
Millrose’s expected $2 billion additional investment outside the Lennar Master Program in 2026 would increase the company’s total invested capital to over $10 billion, with about 40% of that amount outside the Lennar partnership. Even as Millrose grows, executives plan to execute that growth selectively.
“We are being selective, but the pipeline gives us the luxury of that selectivity, and we are confident in the quality of what we are choosing to pursue,” Nitkin said.
Millrose’s debt-to-capitalization ratio is about 26%. This could increase as the company expands, but executives plan to keep debt in check, with a maximum debt-to-capitalization ratio of 33%.
“The reason why we set it at that conservative level is that these are still volatile assets. The reality is that we cycle through about a third of our balance sheet in the ordinary course of business every year. Having that visibility and that cash in the ordinary course to be able to pay down our debt or neutralize the debt with cash on the balance sheet is just a very important asset for this company,” Richman said.
Millrose’s forward-flow agreements with homebuilders, totaling about $9 billion, provide clear pipeline visibility and enable recurring land purchases rather than one-off deals. Over the next year, roughly $3 billion of the portfolio will cycle out.
These forward-flow commitments will help replace those assets and support the company’s $2 billion growth projection, even if Millrose doesn’t select any new homebuilding partners in the year ahead.
A lesson in resilience
Macroeconomic swings affected every player in homebuilding last year, but Millrose posted another positive quarter in Q4, finishing the year on a relatively strong note.
No builders walked away from a contract in 2025, and Millrose continued to deploy more capital and diversify beyond its inaugural partnership with Lennar.
Millrose’s results this quarter and for 2025 demonstrate that capital discipline, smart underwriting, and selective partnerships can pay dividends amid a volatile market. Most of all, Millrose has an unwavering belief in the service it provides to homebuilders and has taken steps to ensure it delivers that service better and with more precision than any competitor.
Tyler Williams
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