EXCLUSIVE: Lennar’s Big New Customer Is Its Own Spinoff, Millrose

Based on Hunterbrook Media’s reporting, at the time of publication Hunterbrook Capital is short $MRP, short $LEN, and long a basket of comparable securities. Positions may change at any time. This article is not investment advice or any recommendation. See full disclosures below.

• Lennar ($LEN) found a big buyer for its houses: the spinoff Millrose ($MRP) it created to hold its land last year. Now Millrose is buying Lennar’s finished homes: Hunterbrook identified more than 700 purchases across at least 51 counties in 15 states — an estimated $200 million or more in about a month. Sustained for a quarter, that pace would equal about a tenth of Lennar’s latest quarterly deliveries and over 7% of its home sales revenue. In the last month, Millrose already appears to have become the largest buyer of Lennar houses that Hunterbrook has identified. A Lennar homeowner in a subdivision where Millrose is buying up homes put it bluntly: “Why are you buying your own homes? Aren’t you supposed to be selling these?”
• The purchases arrived just when Lennar needed them. Hunterbrook identified at least 356 Millrose purchases in the final week of Lennar’s fiscal quarter. Lennar beat the bottom of its delivery forecast by just 340 homes — the only one of five homebuilding targets it met. These sales were the difference between meeting and missing the forecast.
• Millrose told investors it wouldn't be a landlord. Now it's renting out Lennar's houses. Homebuilders need land to build on. To lighten its balance sheet, Lennar moved much of its land into Millrose in 2025. Lennar pays Millrose a fee for the right to buy the lots back, one at a time, when it's ready to build. Millrose’s role was clear: It would own the lots, not rent out houses on them. Millrose's annual report said it would not "have any tenants or occupants" on its properties. In August, Millrose changed its agreements to let it buy Lennar's finished homes and rent them out.
• Millrose appears to earn less on these houses than it pays to borrow. Hunterbrook compared purchase prices in county records with advertised rents on Zillow. After estimated property expenses, the homes would return about 5% a year, before interest and corporate costs. Millrose’s latest bond offering carries interest rates of 6.5% to 6.75% — more than those estimated rental returns.
• Millrose appears to be paying more for these homes than individual buyers and at least one other institution. Millrose paid about 13% more than individual buyers in the same communities, according to Hunterbrook’s analysis, after accounting for the roughly 12% in incentives Lennar says individual buyers received on average. Millrose also paid about 5% more than KKR-linked Slate, another bulk buyer of Lennar homes, in the same communities. Differences between the houses, and incentives absent from public records, could affect the comparisons. But the records offer little evidence that Millrose bought at a discount that would make its rentals more profitable.
• These purchases come as Lennar barely generates cash. Lennar reported about $2.1 billion in profit in fiscal 2025 but just $28 million in free cash flow, the cash leftover after paying to run and invest in the business. That's despite cutting its building costs — and, allegedly, its quality. Hunterbrook's earlier "House from Hell" investigation documented corner-cutting and serious construction defects, later echoed by the Wall Street Journal. One steady drain on Lennar's cash is Millrose: Lennar pays it about $43 million a month to hold land, according to Millrose's most recent report. Those payments continue until Lennar buys the lots or walks away from them, which would mean taking impairments on investments it has already made.
• Why would Millrose help Lennar? It depends on Lennar’s payments. As a real estate investment trust (REIT), Millrose must pay out at least 90% of all its taxable income. Lennar supplied 72% of Millrose's revenue last quarter. Millrose lacks independent capacity: It has no employees and relies on an outside manager, selected by Lennar. Lennar CEO Stuart Miller also holds approximately 43% of Millrose’s voting power. Helping Lennar sell houses could protect Millrose’s biggest customer and voting shareholder. Millrose's own filings warn that its agreements with Lennar weren't negotiated at arm's length and "may be considered more favorable to Lennar."
• Accounting rules say a company cannot book a sale to an entity it controls; a forensic accountant told Hunterbrook the question of Lennar’s control over Millrose seems “black and white” in spirit, if not technically. Lennar says it lacks "the power” to direct Millrose, but “Millrose seems to be acting against their own best interest,” according to JP Krahel, chair of Loyola University Maryland’s accounting department. John McPherson, a forensic accountant whose tip helped bring a successful SEC enforcement action, told Hunterbrook, "This is a tripwire that takes us from a gray zone to black and white.”
• Lennar could not be reached for comment; Millrose did not provide a comment in response to Hunterbrook’s questions. When reached ahead of a prior Hunterbrook article, Lennar issued an 8-K proactively disputing certain issues.

It's a round trip that would make Jensen Huang blush.

Lennar, the nation’s second-largest homebuilder, has found a big new buyer for its homes: Millrose Properties, the company it spun off last year, whose largest voting shareholder is Lennar’s own CEO, Stuart Miller.

In the last week of August, the final days of its fiscal quarter, Lennar sold at least 356 homes to Millrose, according to Hunterbrook's review of property records. That may not sound like a lot for a company that delivers more than 20,000 homes a quarter. But it was just enough.

When Lennar reported third-quarter results on September 16, it fell short of four of the five homebuilding targets it had given investors: orders, price, margin and overhead. The one it hit was deliveries. Lennar had forecast at least 20,500 and reported 20,840, a cushion of 340 homes. Without the sales to Millrose, it would have missed that target, too.

The sales continued. By the end of September, Lennar had sold more than 700 Lennar homes to Millrose across at least 51 counties in 15 states — roughly $200 million in about a month1 — Hunterbrook found. The search is ongoing, and the national total could be higher. If that pace held for a full quarter, Millrose would buy approximately 2,100 homes for $588 million to $630 million. That’s equivalent to about a tenth of Lennar’s latest quarterly deliveries and over 7% of its home sales revenue.

During this period, across a sample analyzed by Hunterbrook — representing about half of Lennar’s development communities — no other Lennar buyer seemed to come close.2

That flips the relationship. Since spinning Millrose off in 2025, Lennar has been its biggest customer, paying Millrose hundreds of millions of dollars a year for the right to buy its land. Now, suddenly, Millrose has become a major customer of Lennar's, too.

Peter, meet Paul. Paul, meet Peter.

In a striking example of the round trip, deed records in Marion County, Florida, show that Lennar:

• Transferred ownership of land to Millrose, a “wholly owned subsidiary of the same owner,” in August 2024;
• Bought back the land at roughly $49,500 per lot in 2025 and 2026 in order to build homes;
• Sold the houses for the average price of $244,351 to Millrose's subsidiary, MRP Liberty, in September.

It wasn’t supposed to be this way.

Millrose was designed as a land bank: a company that owns land so a homebuilder doesn't have to carry its real estate on its books. At its founding, Lennar handed Millrose about $5.5 billion of land, roughly 87,000 homesites, and $1 billion in cash. Lennar pays Millrose option fees, initially set at 8.5% a year, that let it buy the land back lot by lot as it's ready to build. Lennar then builds the houses and sells them. A clear division of labor.

Millrose's filings were explicit about that. In its inaugural 10-K filed in 2025, the company said it did "not, and will not, have any tenants or occupants on any of the properties" in its real estate portfolio. Its properties were for holding land until Lennar bought it and for financing development work. "For the avoidance of doubt," the filing added, those uses did not include "entering into any leases."

Then, on August 27 of this year, Millrose and three Lennar subsidiaries signed an amendment to their Founder's Rights Agreement.

The companies added a new category of assets: "completed single family homes." The disclosure stated that Millrose would buy these homes and then operate them as rentals, exactly what the land bank had said it wouldn’t do in its initial SEC filings. “What you often find with these things is they find other uses for the structure once they have it set up, as things evolve,” said John McPherson, a forensic accountant, referring to Lennar spinning out Millrose.

The same day, Millrose amended its management agreement to permit rental homes and to make Millrose, rather than its manager Kennedy Lewis, pay their operating expenses. Millrose disclosed both updates in exhibits to an 8-K dated September 1.

By the time the new agreements were signed, the buying had already begun.

An Arizona deed dated August 21, six days before the amendments were signed, identifies MRP Liberty LLC as the buyer of a single family home in Buckeye, Arizona, for approximately $1 million. The name doesn't say who is behind the buyer. Its Florida corporate registration does: MRP Liberty's sole member is Millrose Properties.

It was one of several hundred sales to MRP Liberty that helped boost the deliveries Lennar reported in its September 16 earnings release, though the homebuilder did not publicly identify Millrose as a buyer of its homes.

The day after that earnings print, Berkshire Hathaway stepped up its buying of Lennar stock. Over the next few days, it bought nearly $350 million, pushing its stake past 10%.

Did Berkshire know Lennar was selling homes to its own land bank spinoff?

The storied investment firm did not reply to Hunterbrook’s request for comment. But it would be hard to blame it for missing this update. Because this arrangement isn’t in Lennar’s footnotes, the kind Berkshire’s former leaders, Munger and Buffett, were known for gobbling up like peanut brittle.

In fact, Hunterbrook couldn’t find the new arrangement directly described in Lennar’s SEC filings at all.

Millrose’s New Bet

The arrangement is visible, though, on Feaster Drive in Wesley Chapel, Florida, where finished houses stand alongside homes still under construction in a Lennar development.

At house number 9828, the garage stood open when a Hunterbrook reporter visited. A man emerging from the house said he worked for a property manager and had been cleaning inside, and that the house was for rent. He loaded his equipment into a white van marked “Homes for Lease.”

The house was listed by Lennar for sale in April at $490,990, according to Zillow. By August, the asking price had dropped to $420,490. The listing was removed on August 14.

Pasco County deed records show that MRP Liberty, a Millrose subsidiary, bought the house in August for $409,300. It is now listed for rent at $2,825 a month.

It’s a head-scratching purchase.

If the house rents at the advertised price, Millrose would generate about $33,900 in annual rent on its $409,300 purchase. But Millrose only takes home about $3,100 per year after property taxes, insurance, and financing costs, according to Hunterbrook’s estimates, which assume Millrose borrowed at the approximate 5.5% rate on its revolving credit line. That’s a return of less than 1% — before HOA dues, maintenance, or vacancies.

The Pasco County house isn't an outlier. Across the Millrose-owned homes Hunterbrook found listed for rent on Zillow, Millrose would earn little or nothing once expenses and borrowing costs are counted, based on Hunterbrook’s calculation.

Finding tenants will take time too, it seems.

On September 29, a Hunterbrook reporter visited 36 addresses now owned by Millrose across four Lennar developments in Florida’s Marion County. None appeared occupied. Through windows, they saw unfurnished rooms. At several houses, notices hung from doorknobs. This is, perhaps, unsurprising, given how recently Millrose bought these properties.

The next day, a Hunterbrook reporter visited 39 Millrose-owned homes in Princeton, Texas, where Millrose has purchased more than one in four homes Lennar has sold since late August, according to deed records. None appeared to be lived in. Most had no cars or trash cans outside; at one house on Sandpiper Lane, the reporter noted large spiderwebs on the door. A worker answered at one property, while neighbors said several other houses were empty. Construction continued around them. Only four of the 39 even had a rental listing on Zillow as of October 1.

For Lennar, Millrose’s purchases came at a good time.

Lennar’s third-quarter net earnings fell by 51% compared to the same quarter last year. Home sales revenue fell 6%, new orders dropped 9%, and the average selling price slipped to $372,000 as incentives averaged about 12% of purchase price. Incentives are discounts or perks builders offer to entice buyers, such as mortgage-rate buydowns and closing-cost assistance.

Not a bad moment to find a new institutional buyer to perk up demand.

Millrose’s decision to absorb finished homes may also help Lennar with a bigger problem: option fees piling up on lots still sitting in land banks. Lennar pays those fees, at annual rates upwards of 8.5% on an estimated $18.5 billion of optioned land, until it buys the lots.

As Hunterbrook reported in "What Lennar Owes," Lennar capitalizes the fees, recording them as an asset rather than an immediate expense. That asset line, called deposits and pre-acquisition costs, also includes other development costs. It stood at $7.3 billion at the end of August, up from $6.0 billion a year earlier.

Those fees may sit on the balance sheet as an asset, but they're ultimately paid in cash. And Lennar has been draining its resources — fast.

The company ended August with approximately $1.2 billion in homebuilding cash, down from $3.4 billion in November.

So it seems pretty clear that Lennar stands to benefit from its new relationship with Millrose and the cash that comes from a new institutional buyer of its homes. But what’s in it for Millrose? Why would it want to suddenly start a new rental business whose economics seem so unfavorable?

Well, if Lennar struggles to sell homes it has already built, it might have to slow down buying more land to build even more homes. In fact, it’s already slowing down.

Lennar’s lot purchases from Millrose fell by a third between the December and June quarters. And on Lennar’s September earnings call, Miller acknowledged that slower growth had stretched out Lennar’s land purchases, increasing the fees it pays while waiting to buy.

If Lennar can’t sell homes, it has two interesting options: It could just walk away from the land, although that means forfeiting deposits, paying termination fees, and completing remaining land-development obligations.

Or Lennar could pause purchases of new land from Millrose; the agreements let Lennar, in specified circumstances, do that.

Neither is a great outcome for Millrose.

If Lennar pauses purchases, that cuts the affected monthly option payments to Millrose in half. If Lennar walks entirely, Millrose gets to keep the deposits, termination fees, and potentially other fees. But that could also present problems for Millrose, like finding new customers for those lots in a slow housing market.

Instead, by buying Lennar homes, Millrose can help ensure Lennar keeps the land and keeps paying fees on it. That’s important, as Lennar was responsible for 72% of Millrose’s revenue last quarter.

But “protecting the customer” is a form of control Lennar is exerting on Millrose, according to JP Krahel, chair of Loyola University Maryland’s accounting department. He described the arrangement as having Catch-22 logic.

If Millrose is so dependent on Lennar that it must make irrational purchases, then Lennar controls it, he argued. And if that’s the case, the accounting rules say Lennar should fold Millrose into its own financial statements, where sales between the two would cancel out. They would not count as revenue at all.

But if Millrose is independent enough to stay off Lennar's books, it has no reason to buy houses that lose money, both McPherson and Krahel said.

"Millrose seems to be acting against their own best interest,” said Krahel, “and why would they do that if they were an independent organization?"

Millrose’s New Landlord Business: More Responsibilities, Less Income

Millrose discussed its rental-home program in a call summarized in a September 30 Goldman Sachs note to clients. Management described a small rent-to-own pilot for prospective buyers who cannot qualify for mortgages.

Under the proposed model, Millrose would buy homes with signed leases already in place and credit part of tenants’ payments toward an eventual purchase. Management said builder discounts and eventual home sales should produce returns comparable to or better than land banking. It also said the initiative originated inside Millrose, rather than with a builder, and that no asset management fee was currently charged on these homes.

If tenants did not ultimately buy, Millrose would sell the properties on the open market — with no right to return them to the builder.

Here’s what Hunterbrook found.

Millrose's main land deal with Lennar yielded a weighted average of 8.5% a year as of June, before corporate expenses and financing costs. Its land banking deals with other customers yield even higher returns, according to the company.

The finished home purchases Millrose is now making, on the other hand, offer worse returns, according to Hunterbrook’s calculations.

On the surface, the numbers seem fine: The rent Millrose is asking for on Zillow adds up to about 8.4% of what it paid for the homes each year, according to Hunterbrook's review of county deeds and Zillow rental listings for the homes Millrose purchased. That aligns with Millrose telling Goldman Sachs it has similar returns to its existing land banking business. But that’s not the full story.

8.4% is the gross yield. Out of that, a landlord must pay property taxes, insurance, HOA fees, repairs and management fees— which together add up to roughly 40% of the gross rent, based on Hunterbrook’s review of margins disclosed at comparable businesses.

That leaves about a 5% annual return.

And that's before factoring in Millrose’s cost of capital. On September 22, Millrose priced new bonds at interest rates of 6.5% and 6.75%. The bonds don’t appear to be directly tied to these houses, but borrowing at those rates to buy homes yielding about 5% doesn’t appear to be a money-making proposition.

Other landlords have declined to make this trade.

American Homes 4 Rent, a leading industry player, said at a Bank of America-hosted real estate conference in September that homes it delivered in the second quarter yielded about 5.4%, and that it won't underwrite new land below around 6%. The eight major institutional landlords were reportedly net sellers of 3,011 homes in the second quarter, five times as many as a year earlier.

Lennar’s largest peer DR Horton, which, among other business lines, builds rental communities and sells them to investors, reported a 44% drop in sales to institutional landlords, according to a recent 10-Q.

Invitation Homes, another large owner of single-family homes, has been selling its portfolio to fund share buy backs, vowing to continue to do so as long as its shares trade at a discount to NAV. Millrose too trades at a significant discount to NAV.

That is the environment in which Millrose has, suddenly, decided to start purchasing homes to rent.

So why is Millrose doing this? Is Lennar making Millrose an offer it can’t refuse? Houses at tremendous discounts?

Nope. Doesn’t look like it!

In the 47 Lennar communities where the pricing information was available on public deed data Hunterbrook found, Millrose paid an average of $290,661 per home.3 That’s a few hundred dollars cheaper than what individual buyers in the same communities paid: $291,112 on average, weighted to match Millrose's purchases.

But individual buyers also got incentives, which Lennar said averaged about 12% last quarter. Subtract those, and families effectively paid about $256,000. Assuming Millrose didn’t receive similar incentives, it paid roughly 13% more than individual buyers.

Another, clearly arms-length institutional buyer did get a better deal.

KKR-linked Slate, which also appeared to be a major institutional buyer of Lennar homes in our deed data, paid about $263,000 on average on Lennar homes compared to $277,000 Millrose paid across 15 communities where both companies purchased homes and where pricing data was available.

The comparison doesn't capture every difference in size, lot or finishes, or incentives missing from public records. The homes could still pay off for Millrose through rising rents, appreciation, or favorable financing. But on the surface, it’s hard to see why this is a particularly good use of capital for Millrose.

Hunterbrook also spoke with five homeowners in these communities grappling with institutional landlords. A resident in Millwood Estates, the Lennar community in Florida where Lennar sold homes back to Millrose after purchasing lots from Millrose months earlier, said they noticed more homes for rent and worried about what institutional buying meant for home values. “I’ve been thinking about trying to sell, and I don’t even know if I could get what I put into it,” the homeowner said.

A 2025 study of more than 9,000 homes bought by institutional investors around Charlotte, North Carolina found that neighboring home values fell about “2% within five years,” with more crime and far fewer building permits nearby, and that the declines occurred only around homes owned by publicly traded REITs. Another study, a Federal Reserve Bank of Philadelphia working paper released the same year, however, concluded single-family REITs modestly raised prices.

Andrew Baird, another Millwood Estates resident, mentioned no one in his community has figured out yet that the institutional buyer is related to Lennar. “It’s just kind of a weird dynamic,” he said. “Why are you buying your own homes? Aren’t you supposed to be selling these?”

Kevin Franz, a homeowner in Prosperity Lakes in Manatee County, Florida, noted that Lennar appeared to be slashing prices to move inventory and make way for yet to be launched developments in the area. “A lot of us are underwater now,” Franz said.

Lennar's Hold on Millrose

Millrose and Lennar are technically separate companies, but they share the same DNA.

In addition to Lennar being Millrose’s largest customer — and Lennar CEO Miller being Millrose’s largest voting shareholder, with 43% of the votes — Lennar's influence also runs through Kennedy Lewis, which has had a long, close relationship with the homebuilder. Lennar picked Kennedy Lewis for the job of managing Millrose, and the ties between Kennedy Lewis co-founder Darren Richman and Lennar go back two decades.

Richman, now the CEO of Millrose, once covered Lennar as a high-yield credit research analyst at Goldman Sachs. In 2021, Lennar and Kennedy Lewis began a land-banking partnership that Millrose's investor presentation called a "deep-rooted relationship highlighted by their completion of $4.5B+ of land-banking transactions since 2022."

Kennedy Lewis also served as Lennar's unpaid strategic adviser on the structure, formation, and contracts of the Millrose spinoff. According to Millrose's prospectus, "Lennar did not engage in a competitive selection process to evaluate KL against other potential manager candidates, including managers with relevant experience in managing public companies."

Millrose has a separate board, whose directors it identifies as independent. But its policies give standing preapproval to the Lennar agreements and the transactions they contemplate. And the August 27 amendment permitting the rentals refers to an "approved single family home rental strategy.”

The filing does not say who, exactly, was behind that approval.

Asked for any more detail on the discussions between Lennar and Millrose, neither company provided a comment.

But Millrose itself has warned investors about potential conflicts of interest.

Because it had “no independent management or personnel before the spinoff,” its agreements with Lennar "have not been done at arm's length," the company disclosed to the SEC, and "there can be no assurance that Lennar negotiated the Management Agreement with Millrose's best interests in mind."

The terms, it said, "may be considered more favorable to Lennar than if Lennar had negotiated with a third-party land bank."

And that was before Millrose started buying Lennar’s homes.

Authors

Matthew Termine is a former corporate lawyer with significant experience advising companies operating within regulated industries. Matt led Hunterbrook’s investigation and reporting on United Wholesale Mortgage. In 2017, Matt was credited by the Wall Street Journal, among others, for identifying suspicious mortgage loan transactions that led to several successful criminal prosecutions, including that of a prominent political operative and the chief executive officer of a federally chartered bank. He is a graduate of Trinity College and Fordham University School of Law.

Jenny Ahn joined Hunterbrook after serving many years as a senior analyst in the US government. She is a seasoned geopolitical expert with a particular focus on the Asia-Pacific and has diverse overseas experience. She has an M.A. in International Affairs from Yale and a B.S. in International Relations from Stanford. Jenny is based in Virginia.

Sam Koppelman is a New York Times best-selling author who has written books with former United States Attorney General Eric Holder and former United States Acting Solicitor General Neal Katyal. Sam has published in the New York Times, Washington Post, Boston Globe, Time Magazine, and other outlets. He has a BA in Government from Harvard, where he was named a John Harvard Scholar and wrote op-eds like “Shut Down Harvard Football,” which he tells us were great for his social life. Sam is based in New York City.

Blake Spendley joined Hunterbrook from the Center for Naval Analyses (CNA), where he led investigations as a Research Specialist for the Marine Corps and US Navy. He built and owns the leading open-source intelligence (OSINT) account on X/Twitter, called @OSINTTechnical (over 1 million followers), which also distributes Hunterbrook Media reporting. His OSINT research has been published in Bloomberg, the Wall Street Journal, and The Economist, among other top business outlets. He has a B.A. in Political Science from USC.

Michelle Cera trained as a sociologist specializing in digital ethnography and pedagogy. She completed her PhD in Sociology at New York University, building on her Bachelor of Arts degree with Highest Honors from the University of California, Berkeley. She has also served as a Workshop Coordinator at NYU’s Anthropology and Sociology Departments, fostering interdisciplinary collaboration and innovative research methodologies.

Editors

Vikas Kumar joined Hunterbrook from The Capitol Forum, where he led the corporate investigations team for a decade as a senior editor. He was previously an attorney at Gordon Feinblatt, a trial attorney for the Department of Justice, and a law clerk for a federal judge. He has a J.D. from University of Virginia School of Law and a bachelor's from Emory University. Vikas is based in Maryland.

Ben Montgomery and Steven Monacelli contributed to this reporting.