Millrose Properties, Inc. 10-K

10-K 1 d931976d10k.htm 10-K 10-K Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from    to Commission File Number: 001-42476 Millrose Properties, Inc. (Exact name of registrant as specified in its charter) Maryland 99-2056892 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 600 Brickell Avenue, Suite 1400, Miami, Florida 33131 (Address of Principal Executive Offices) (Zip Code) 212-782-3841 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A common stock, par value $0.01 per share MRP New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒* * The registrant became subject to such requirements on January 17, 2025, and it has filed all reports so required since that date. Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “ large accelerated filer, ” “ accelerated filer, ” “ smaller reporting company ” and “ emerging growth company ” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐ No ☒ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of June 28, 2024, the last business day of the Registrant’s most recently completed second quarter, there was no established public market for the registrant’s common stock, par value $0.01 per share. Number of shares of Class A common stock outstanding as of March 25, 2025: 154,183,686 Number of shares of Class B common stock outstanding as of March 25, 2025: 11,819,811 Documents Incorporated By Reference None. Table of Contents TABLE OF CONTENTS CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS 1 SUMMARY OF RISK FACTORS 3 GLOSSARY OF DEFINED TERMS 5 BASIS OF PRESENTATION OF FINANCIAL AND OPERATIONAL INFORMATION 19 AVAILABLE INFORMATION 20 Part I Item 1. Business 21 Item 1A. Risk Factors 46 Item 1B. Unresolved Staff Comments 95 Item 1C. Cybersecurity 95 Item 2. Properties 96 Item 3. Legal Proceedings 108 Item 4. Mine Safety Disclosures 108 Part II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 109 Item 6. [Reserved] 110 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 111 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 121 Item 8. Financial Statements and Supplementary Data 123 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139 Item 9A. Controls and Procedures 139 Item 9B. Other Information 139 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 139 Part III Item 10. Directors, Executive Officers and Corporate Governance 140 Item 11. Executive Compensation 147 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 151 Item 13. Certain Relationships and Related Transactions, and Director Independence 153 Item 14. Principal Accounting Fees and Services 164 Part IV Item 15. Exhibits and Financial Statement Schedules 166 Item 16. Form 10-K Summary 168 SIGNATURES 169 All capitalized terms herein have the meanings defined herein or ascribed to them in the “ Glossary of Defined Terms ” section of this Form 10-K beginning on page 5. i Table of Contents CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “Form 10-K”) contains forward-looking statements including, in particular, statements about Millrose Properties, Inc.’s (“Millrose,” “we,” “us” or “our”) plans, strategies and objectives, as well as statements about Millrose’s business (including Millrose Holdings and any of the other Millrose Subsidiaries), and Millrose’s future plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as “may,” “can,” “shall,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words or the negatives thereof intended to identify forward-looking statements. However, not all forward-looking statements contain these identify words. Specific forward-looking statements in this Form 10-K include statements regarding: • Millrose’s plans and objectives for future operations, including plans and objectives relating to future growth of our business and the HOPP’R; • the availability of capital at any given time to finance the various endeavors, projects and acquisitions that are expected or planned for Millrose, as well as the availability of capital that needs to be reserved for specified uses (whether contractually or by law); • expectations about the quality and value of the Supplemental Transferred Assets and the existence of any liabilities attached to the Supplemental Transferred Assets, and the adequacy of the protection of Lennar’s indemnification of Millrose in connection with the Supplemental Transferred Assets Transaction; • expectations and assumptions around our ongoing relationship with Lennar, including expectations that Lennar will fully perform on all its obligations pursuant to the Lennar Agreements (and that there will be regular and timely exercises of its Purchase Options) and expectations that it will continue to provide us with ongoing transactions pursuant to the Master Program Agreement and refer Lennar Related Ventures who may be interested in the HOPP’R to us as potential new customers; • Lennar’s expected business, operations and financial position; • the possibility of providing the HOPP’R to future new customers, including Lennar Related Ventures and Other Customers, and the nature of any such future arrangements; • the planned use, development and sales of the Transferred Assets and the Supplemental Transferred Assets; • any expected acquisitions, uses, development and sales of Future Property Assets; • expectations and assumptions around our relationship with our Manager, an affiliate and wholly-owned subsidiary of Kennedy Lewis; • our status as a REIT and Millrose Holdings’ expected status as a TRS; • our status as an emerging growth company; • expectations around ownership limits of our common stock; and • expectations and assumptions around our source of revenues, expected income, ability to secure financing or incur indebtedness. Assumptions relating to these statements involve judgments with respect to, among other things, future macroeconomic, competitive and market conditions, future land values, future business decisions, future environmental conditions and relationships with our customers, all of which are difficult or impossible to accurately predict and many of which are beyond our control. All forward-looking statements included herein are based on information available to us as of the date hereof and speak only as of such date. The forward-looking statements contained in this Form 10-K reflect our views as of the date of this Form 10-K about future events and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ significantly from those expressed or implied in any forward-looking 1 Table of Contents statement. Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate, and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. Investing in our common stock involves a high degree of risk. You should carefully review “Part I, Item 1A. Risk Factors” of this Form 10-K for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2 Table of Contents SUMMARY OF RISK FACTORS Investing in our common stock involves a high degree of risk. You should carefully review “Part I, Item 1A. Risk Factors” of this Form 10-K which contains a detailed discussion of the material risks that you should consider before you invest in our common stock. The following is a summary of the principal risks that could adversely affect our business, results of operations, financial condition and cash flows: • We are a newly formed company with limited operational history, and you have a limited basis on which to evaluate our ability to achieve our business objective or to even perform as a standalone and separate business. • As a holding company, we are wholly dependent on our subsidiaries as our sole source of working capital to maintain our operations. • Our recycled capital business model is contingent on our customers electing to exercise their land purchase options or our being able to sell properties as to which options are not exercised. • Our agreements with Lennar involve conflicts of interest, and we might have received better terms from unaffiliated third parties. • Any exercise by Lennar of its Enforcement Rights may severely negatively impact our business operations and financial condition. • We have not obtained any environmental reports or independent appraisals or fairness opinions as to the value of the Transferred Assets. Real estate valuation is inherently subjective and uncertain, especially during periods of volatility. • Lennar’s obligation to undertake Horizontal Development on the Transferred Assets and Future Property Assets may negatively impact our business. • Our success depends on our ability to receive new business under the Lennar Agreements and secure new agreements with other customers, which may be limited by Lennar’s Founder’s Rights. • An event that materially and adversely affects Lennar could materially and adversely affect our business, financial position or results of operations. • Past performance by the management team, Kennedy Lewis, Lennar and their respective affiliates may not be indicative of future performance of an investment in us. • If we are not able to raise additional capital on acceptable terms (or at all) to fund our operations, we may not always have sufficient funding to maintain our operations. Our Debt to Equity Ratio Limit may also impact our ability to enter into financing arrangements with third parties. • Volatility in the market may impact our ability to do business. A decline in prices of new homes could require us to write down the carrying value of land we own. • Land assets and real estate investments are not as liquid as certain other types of assets. • We may acquire Future Property Assets and entities holding such Future Property Assets that involve risks that could adversely affect our business and financial condition. • Some of the Supplemental Transferred Assets are outside of the geographies in which Lennar has historically operated, and property values in those geographies may be different from those in which Lennar has operated. • Ownership of land and other real estate assets is subject to risks and liabilities from a wide range of general and industry-specific laws and regulations relating to the protection of the environment. • Our business is susceptible to risks from natural disasters, geopolitical events and other events outside of our control that may delay development on the land we hold for our customers. • Our insurance coverage may not cover all potential losses. • Our inability to successfully acquire adequate inventory of land assets at reasonable prices could adversely impact our operations. • We cannot make any assurances that our growth or expansion strategies will be successful, and we may incur a variety of costs to engage in such strategies. • Our business and operations could suffer in the event of system failures or cybersecurity attacks. • We are fully dependent on our Manager to provide us with management and key personnel to operate our business. Our Manager can terminate the Management Agreement on 60 days’ notice under certain circumstances, and we may not be able to find a suitable replacement within that time. 3 Table of Contents • The termination of the Management Agreement may require us to pay a substantial termination fee. • You have limited control over changes in our policies and operations, including targeted land assets. • We will pay substantial fees to our Manager and its affiliates, which increases the risk that we will not earn a profit. • Any adverse changes in the financial health of our Manager or its affiliates or in our relationship with them could hinder our operating performance and the return on your investment. • There are significant potential conflicts of interest that could affect our business returns. We may be at an increased risk for dissident stockholder activities due to perceived conflicts of interest. • Our Manager maintains a contractual as opposed to a fiduciary relationship with us. Our Manager’s liability is limited under the Management Agreement, and we have agreed to indemnify the Manager against certain liabilities. • Our management may face competing demands relating to their time, and Kennedy Lewis manages Land Banking entities that compete with us for opportunities and resources. In particular, our CEO is a Managing Partner of Kennedy Lewis and a member of the investment committee of funds advised by Kennedy Lewis. There is no requirement for our CEO to dedicate a specific amount of time to Millrose. • The Miller Family, who is a substantial stockholder of Lennar, holds approximately 43% of the voting power in Millrose. The Miller Family may be able to cause us to do things that are favorable to Lennar that may not be in Millrose’s best interests. • Our rights and the rights of our stockholders to recover claims against our directors and officers are limited. • We may not have sufficient funds to satisfy indemnification claims of our officers and directors. • Our Charter and Bylaws, along with applicable provisions of certain of our agreements and of Maryland law, include certain change of control and/or anti-takeover defense measure provisions, which could depress the market price of our common stock. • Our Bylaws designate Maryland as the sole and exclusive forum for certain types of actions and proceedings, limiting our stockholders’ ability to obtain a favorable judicial forum. • We might fail to qualify or remain qualified as a REIT, including due to factors outside of our control. • Even though we intend to qualify as a REIT, we will face tax liabilities that reduce our cash flows. We must also meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. • Our organizational structure, including our ownership of TRSs, raises certain tax risks. • Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends. • The stock ownership restrictions of the Code for REITs and the stock ownership limits in our Charter may inhibit market activity in shares of our stock and restrict our business combination opportunities. • The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders. • We rely solely on our Manager for compliance with our public company responsibilities and corporate governance practices, which will take substantial time and costs, and our Manager does not have prior experience in managing publicly traded companies. • Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting. • There is currently a limited history of an active trading market for our Class A common stock. The market price and trading volume of our Class A common stock may be volatile and may face negative pressure. Our Class B common stock will not be listed on any exchange and may not trade at all. • Your voting power in Millrose may be diluted if we issue more shares of our common stock in the future. • We cannot assure you of our ability to pay dividends in the future. • We are an “emerging growth company” and intend to take advantage of applicable reduced disclosure requirements, which could make our common stock less attractive to investors. • We may not achieve some or all of the expected benefits of the Spin-Off, and the Spin-Off may have a material adverse effect on our business, financial condition and results of operations. The above list of factors is not exhaustive. For additional information on principal factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussion under “Part I, Item 1A. Risk Factors.” 4 Table of Contents GLOSSARY OF DEFINED TERMS In this Form 10-K, the following terms and abbreviations have the meanings listed below. Additional Deposit means, with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets, the amount equaling 5% of the Takedown Price of the Homesites on a Property that are still subject to the Purchase Options that Lennar has outstanding, which shall be paid in the form of either (i) a termination fee with respect to any unpurchased Homesites on any Property for which Lennar decides to terminate its Purchase Option, (ii) a prepayment call exercise in the event our Manager, in its reasonable judgment, determines that Millrose Holdings requires such additional capital to fund its ongoing business operations in the ordinary course, provided that the combination of (i) and (ii) shall not exceed in the aggregate 5% of the Takedown Price of the Homesites on a Property that are still subject to the Purchase Option. Admitted Properties means the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets that have been admitted to the Program pursuant to the Master Program Agreement. AFFO means the adjusted funds from operations for purposes of determining Millrose’s cash distributions, which are calculated by starting with the NAREIT definition of funds from operations, which is the net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation, adjusted to eliminate the impact of non-recurring items that are not reflective of ongoing operations and certain non-cash items that reduce or increase net income (loss) in accordance with GAAP, and also adjusted for income tax expense (other than income tax expenses of our TRS) that will not be incurred following our election and qualification to be subject to tax as a REIT for U.S. federal income tax purposes. Allocation Policy means the policy governing the allocation of investments between Millrose and affiliates of Kennedy Lewis, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” Applicable Rate means (i) with respect to Transferred Assets and the Supplemental Transferred Assets, a fixed rate of 8.5% per annum, calculated based upon a 360 day year of 12 months of 30 days each and (ii) with respect to Future Property Assets, a floating rate that will be determined with respect to a Property when the Proposed Project Report is submitted and remain fixed through the life of the Proposed Project, which is equal to the sum of (a) the Risk Spread, (b) a spread of 4.00% and (c) the Rating Adjustment; provided, however, that if the Applicable Rate calculated as described above for Future Property Assets is greater than 10.0%, the Applicable Rate shall be 10.0%, and if the Applicable Rate calculated as described above for Future Property Assets is less than 7.0%, the Applicable Rate shall be 7.0%. The Applicable Rate will be calculated as of the first day of every month, and all new Future Property Assets acquired by Millrose pursuant to the Lennar Agreements during that month will have that rate applied to the respective Monthly Option Payments. Applicable Rate Adjustment Right means the right that Lennar has under the Founder’s Rights Agreement to adjust its Applicable Rate for any future Proposed Projects to any lower rate agreed upon between Millrose and any Lennar Related Ventures or Other Customers with respect to any HOPP’R arrangements, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” Audit Committee means the Audit Committee of the Board. Board means the Board of Directors of Millrose. Business Assets means the set of assets transferred to Millrose in connection with the Spin-Off, consisting of (i) the use of Lennar’s HOPP’R, including the HOPP’R trademark rights, (ii) the Transferred Assets, as described under “Part I, Item 2. Properties—Description of the Transferred Assets and the Supplemental 5 Table of Contents Transferred Assets—Development of the Transferred Assets and the Supplemental Transferred Assets,” (iii) the Lennar Services, and (iv) the Cash Contribution of (a) approximately $415 million in cash and (b) approximately $585 million in cash as payment on the Option Deposits by Lennar to Millrose in connection with the contribution of the Transferred Assets pursuant to the Lennar Agreements. Bylaws means the Amended and Restated Bylaws of Millrose. Capital Priority Right means the evergreen right Lennar has under the Founder’s Rights Agreement to reserve a certain amount of Millrose’s available capital exclusively for acquisitions of Future Property Assets and the completion of Horizontal Development of such Future Property Assets for Lennar within any given period. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement” for more information. Cash Contribution means the contribution by Lennar to Millrose of (a) approximately $415 million in cash and (b) an additional approximately $585 million in cash as payment on the Option Deposits by Lennar to Millrose in connection with the contribution of the Transferred Assets pursuant to the Lennar Agreements. Millrose used approximately $876 million of the Cash Contribution to finance Supplemental Transferred Assets Transaction. Charter means the Articles of Amendment and Restatement of Millrose. Class A common stock means Millrose’s Class A common stock, par value $0.01 per share, each with one vote per share, listed on the NYSE under the ticker symbol “MRP.” Class B common stock means Millrose’s Class B common stock, par value $0.01 per share, each with ten votes per share of Class B common stock, except when voting together with the holders of the Class A common stock, each share of Class B common stock has the greater of (i) ten votes per share and (ii) that number of votes per share of Class B common stock that would entitle the outstanding shares of Class B common stock to cast, in the aggregate, 35% of the votes entitled to be cast on the matter. Millrose has not applied to have our Class B common stock listed on the NYSE or on any other securities exchange, or to have it quoted on any quotation system, and we do not expect to do so in the future. Code means the Internal Revenue Code of 1986, as amended. Code of Business Conduct and Ethics means the Code of Business Conduct and Ethics of Millrose. common stock means the Class A common stock and Class B common stock. Compensation Committee means the Compensation Committee of the Board. Corporate Governance Guidelines means the Corporate Governance Guidelines of Millrose. Credit Agreement means the credit agreement, dated February 7, 2025, among Millrose, the lenders party thereto and JPMorgan Chase Bank, N.A., as a lender and as administrative agent for the lenders, which provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion. Debt to Equity Ratio Limit means Millrose may not enter into any third-party financing arrangements if such financing arrangement would cause its debt to equity ratio to exceed 1:1, unless Millrose obtains the prior approval of Lennar. Debt to Equity Ratio Limit Right means Lennar’s consent right, pursuant to the Founder’s Rights Agreement, to prohibit Millrose to enter into any third-party financing arrangements if such financing arrangement would cause its debt to equity ratio to exceed 1:1, unless Millrose obtains the prior approval of Lennar. 6 Table of Contents Distribution means the distribution by Lennar on the Distribution Date of Class A common stock (including fractional shares for which Lennar stockholders received cash) and Class B common stock to holders of Lennar’s Class A common stock and Lennar’s Class B common stock. In the Distribution, Lennar distributed to the holders of Lennar Class A common stock and Lennar Class B common stock one share of our Class A common stock for every two shares of Lennar Class A common stock or Lennar Class B common stock held as of January 21, 2025. Distribution Date means February 7, 2025. Dodd-Frank Act means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended. Effective Equity Price Protection Right means the right granted to Lennar that in the event that Millrose issues additional shares of Class A common stock (or any other equity securities in a manner consistent with its Charter) within 18 months of February 7, 2025 to any Other Customer in exchange for Future Property Assets in a transaction consistent with the Applicable Rate Adjustment Right and with an aggregate value in excess of $500 million at a price per share lower than the price per share received by Lennar for the Business Assets, Millrose will issue an additional proportional number of shares of Class A common stock that will be distributed to Millrose’s stockholders through a stock dividend (subject to approval by the Board and in compliance with Maryland law), pursuant to the Founder’s Rights Agreement. Enforcement Rights means certain rights Lennar has in the event Millrose fails to perform its obligations under any of the Lennar Agreements with respect to any takedown obligations, in addition to any damages owed to Lennar by Millrose in connection with any breach of contract claim, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” ESG means environmental, social, and corporate governance. Excepted Holder Limit means a limit on ownership of shares of Millrose’s stock established for a person by our Board (prospectively or retroactively), in its sole discretion, that is different from the ownership limits contained in our Charter, subject to the conditions described in our Description of Securities attached hereto as Exhibit 4.1. Exchange Act means the Securities Exchange Act of 1934, as amended. Founder’s Rights Agreement means the Founder’s Rights Agreement, by and between Millrose and Lennar as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement” as amended, modified and/or supplemented from time to time. Founder’s Rights means the rights granted to Lennar pursuant to the Founder’s Rights Agreement, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” Fund III means Kennedy Lewis Capital Partners Master Fund III LP and its related parallel vehicles which are advised by Kennedy Lewis Management LP, an affiliate of KL. Future Property Assets means any Homesites, prospective Homesites, properties or other related land assets that Millrose (through Millrose Holdings, the Property LLCs and Other Subsidiaries) may (i) acquire in the future pursuant to the Lennar Agreements or (ii) acquire in the future pursuant to any agreements that Millrose or its subsidiaries may negotiate and enter into with Lennar (outside of the Lennar Agreements), any Lennar Related Ventures or Other Customers, respectively, in the future. 7 Table of Contents GAAP means generally accepted accounting principles in the United States. Guaranty means the Payment and Performance Guaranty by Lennar Corporation in favor of Millrose and each Property LLC, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Payment and Performance Guaranty.” Homesite means land inventory that has all discretionary approvals and entitlements necessary to allow Horizontal Development to begin soon after the acquisition of the land, including (i) subdivided and fully developed land inventory on which homes may be built and (ii) subdivided or non-subdivided land inventory undergoing necessary Horizontal Development and subdivision so that homes may be built on them. HOPP’R means Lennar’s Homesite Option Purchase Platform, a comprehensive suite of systems and procedures that Lennar developed to operate and manage the acquisition, financing and development of land assets on a large scale, licensed to Millrose under the HOPP’R License Agreement. HOPP’R License Agreement means the HOPP’R License Agreement, by and between Millrose and a wholly-owned subsidiary of Lennar, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—HOPP’R License Agreement.” HOPP’R Rights means the HOPP’R and related intellectual property rights, including the HOPP’R trademark rights. Horizontal Development means any work relating to the installation of utilities and infrastructure required to obtain a building permit for the construction of a residence, including drainage, sewage, water lines, roads, sidewalks, utility lines, grading and landscaping. Sometimes such infrastructure can also include the construction of recreational facilities, common area elements and other amenities. Horizontal Development is work that must be done prior to home construction, as it lays the groundwork for building homes. Initial Deposit means an amount equaling (i) with respect to the Transferred Assets, 5% of the total value of the Transferred Assets including future purchases and Horizontal Development costs ; (ii) with respect to the Supplemental Transferred Assets, 5% of the total value of the Transferred Assets and the Horizontal Development costs; and (iii) with respect to any Future Property Assets, 5% of the projected total land acquisition and Horizontal Development costs for such Future Property Assets, which shall be set forth in the applicable Project Addendum. Initial Term means the initial term of the Management Agreement, which is the period beginning on February 7, 2025 and ending on the third anniversary of such date. Investment Company Act means the Investment Company Act of 1940, as amended. Investment Guidelines means the market-level factors and property-level factors that our Manager considers when evaluating potential acquisition of properties, as set forth in the Management Agreement, as detailed in “Part I, Item 1. Business—Millrose’s Operating Guidelines—Investment Guidelines.” IRS means the U.S. Internal Revenue Service. JOBS Act means the Jumpstart Our Business Startups Act of 2012, as amended. Kennedy Lewis means Kennedy Lewis Investment Management LLC, an institutional alternative investment firm, together with its affiliates. KL means Kennedy Lewis Land and Residential Advisors LLC, an affiliate and wholly-owned subsidiary of Kennedy Lewis, that externally manages Millrose pursuant to the Management Agreement. 8 Table of Contents KLRES means Kennedy Lewis Residential Property Income Company LP, which is advised by Kennedy Lewis Residential Property Income Advisors LLC, an affiliate of KL, our Manager. Land Banking means an off-balance sheet financing structure whereby a land bank (separate from the home builder itself) purchases fee title to land parcels, and then enters into purchase option agreements with home builders to sell the land parcels to the home builder once the land parcel becomes fully developed Homesites. The purchase option agreements may be secured by a nonrefundable option fee paid by the home builder. The land parcels can take many years from start to completion and may or may not have all permits, approvals and entitlements at the time of closing, and the time from when the land is purchased until the last Homesite is sold to home buyers can be protracted for many years. Traditional Land Banking arrangements may also involve a construction agreement by which the land bank pays the home builder, as the contractor, to develop the property at a fixed or guaranteed cost and generally lack asset diversity running the risk that a market downturn in one region could lead to multiple customers with purchase option contracts opting not to exercise their options. land under development means land for which all discretionary entitlements, including all permits and approvals, have been received, and surveys and planning have been completed, and Horizontal Development is already underway, which must be substantially completed before home construction can begin, as further described in “Part I, Item 2. Properties—Description of the Transferred Assets and the Supplemental Transferred Assets—Geography, Value and Types of Transferred Assets and the Supplemental Transferred Assets.” Land under development is one of the three categories of land types that comprise the Transferred Assets and the Supplemental Transferred Assets. Lennar means Lennar Corporation, a publicly traded Delaware corporation with its Class A common stock and Class B common stock listed on the NYSE. In certain contexts (including with respect to naming parties to certain agreements), the word Lennar may refer to a subsidiary of Lennar Corporation that entered or will enter into an agreement in lieu of the ultimate parent company. Lennar Agreements means the Master Program Agreement, Master Option Agreement, Master Construction Agreement, Multiparty Cross Agreements, Founder’s Rights Agreement, Registration Rights Agreement and other agreements described herein and others which Lennar and Millrose or Millrose Holdings may enter into from time to time in connection with Millrose’s (including Millrose Holdings) provision of the Recycled Capital HOPP’R to Lennar and/or that govern Lennar’s ongoing relationship with Millrose. Lennar Related Ventures means any residential home construction or real estate development companies in the United States (i) in which Lennar has any amount of ownership interests or (ii) with which Lennar has any contractual business relationship, in each case, that is referred by Lennar to Millrose as a HOPP’R customer. Lennar Services means the services that Lennar’s personnel provides to Millrose (and applicable subsidiaries) pursuant to the Master Program Agreement, relating to the identification, analysis, diligence, evaluation, vetting and selection of any Future Property Assets that Lennar may wish to present to Millrose Holdings for acquisition. Such services leverage the land sourcing, acquisition and development skillsets, knowledge and expertise of Lennar’s personnel that have been fostered from the years of experience, innovation and technology that Lennar has accumulated in the industry. Lennar Services also includes the horizontal development installation that Lennar will provide as part of its Work obligations pursuant to the Master Construction Agreement. For the avoidance of doubt, Millrose only has access to the services that are being provided by Lennar’s personnel; all personnel remain as employees of Lennar, and Lennar expects to continue to use its personnel for its own sourcing, acquisition and development activities in connection with its homebuilding operations. LLC means limited liability company. Management Agreement means the Management Agreement, by and between Millrose and our Manager as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” 9 Table of Contents Management Change of Control means, pursuant to the Founder’s Rights Agreement, the event that both David K. Chene and Darren L. Richman (i) cease to exercise control over the management or the decision-making process at Kennedy Lewis, (ii) cease to exercise direct or indirect control (including through delegated employees) over the management of Millrose or (iii) transfer or convey any membership interests of Kennedy Lewis, or the Manager, directly or indirectly, to a company (or any affiliate thereof) engaged primarily in the building of single family homes in the United States or a company (or any affiliate thereof) engaged primarily in acquiring and developing homesites in the United States. Management Fee means an amount equal to 1.25% of the Millrose Tangible Assets, paid to the Manager on a quarterly basis for its management services to Millrose, pursuant to the Management Agreement, calculated by the Manager and reviewed by the Board, as further described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” The management services for which the Management Fee is paid include performing Millrose’s and Millrose Holdings’ obligations under the Lennar Agreements and operating the business and managing our portfolio of land assets in line with the governance documents and corporate policies of Millrose. The Management Fee includes the costs of all administrative and operating functions and systems, office space and office equipment, public company expenses, compensation and fees paid to employees, directors and third-party experts, consultants and advisors, as well as outside legal counsel and independent public accounting firms (but does not include fees incurred for services in connection with extraordinary litigation and mergers and acquisitions and other events outside Millrose’s ordinary course of business, including, in certain circumstances, costs associated with the ownership and maintenance of land). Management Succession Consent Right means the right granted to Lennar in the event the Management Agreement is terminated for any reason (with or without cause), including if the Board terminates the Manager or if our Manger resigns, to approve any replacement manager that Millrose may so choose, prior to such replacement manager assuming any duties and obligations under the Management Agreement, as well as the right to approve any management agreement to which such replacement manager will be subject, pursuant to the Founder’s Rights Agreement. Manager means the third-party entity which externally manages our business and operations pursuant to a management agreement. Currently, our Manager is KL. Manager Diligence Obligations means the diligence processes that our Manager undergoes as follows: The Manager employs its current underwriting team to conduct a thorough independent diligence assessment of each proposed transaction, ensuring adherence to the Investment Guidelines and assessing the credibility of the home builder’s financial projections. Our Manager’s underwriting team consists of more than 30 professionals proficient in homebuilding, land acquisition, and financial analysis. They leverage third-party market data and internal proprietary datasets to formulate an autonomous evaluation of projected home selling prices, sales pace, and profit margins for each community. In general, the Manager’s due diligence includes an appropriate legal evaluation that ensures the land has received all necessary entitlement and environmental approvals; however, in view of the Manager’s ability pursuant to the Lennar Agreements to put back Future Property Assets after Lennar exercises its termination rights in certain limited circumstances involving a misrepresentation relating to title, environmental matters and permits/approvals, there is not a need to conduct such an extensive legal analysis for proposed transactions with Lennar. For all other home builders and Horizontal Development counterparties, the Manager conducts an extensive due diligence process, including an appropriate legal analysis unless it is able to negotiate the same put back rights as in the Lennar Agreements. Master Construction Agreement means the Master Construction Agreement, by and between Millrose, Millrose Holdings and U.S. Home as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Construction Agreement,” as supplemented by any terms and provisions contained in any Project Addenda. Properties comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets acquired by Millrose 10 Table of Contents Holdings (or its subsidiaries) for Lennar have been or will be made subject to this Master Construction Agreement pursuant to Project Addenda that have been or will be executed with respect to each property by the appropriate parties. Master Option Agreement means the Master Option Agreement, by and between Millrose, Millrose Holdings and U.S. Home as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Option Agreement,” as supplemented by any terms and provisions contained in any Project Addenda. Properties comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets acquired by Millrose Holdings (or its subsidiaries) for Lennar are or will be made subject to this Master Option Agreement pursuant to Project Addenda that has been or will be executed with respect to each property by the appropriate parties. Master Program Agreement means the Master Program Agreement, by and between Millrose and U.S. Home as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Program Agreement,” as supplemented by any terms and provisions contained in any Project Addenda. Properties comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets acquired by Millrose Holdings (or its subsidiaries) for Lennar have been or will be made subject to this Master Program Agreement pursuant to Project Addenda that have been or will be executed with respect to each property by the appropriate parties. MGCL means the Maryland General Corporation Law. Miller Family means Stuart Miller, each member of his family that would be treated as a stockholder of Millrose pursuant to Section 544(a)(2) of the Code or Section 318(a)(1)(A) of the Code, whichever is more expansive, and any person through which the Miller Family beneficially owns or constructively owns capital stock or that would be treated as beneficial owning or constructively owning capital stock of Millrose through the Miller Family, collectively. Millers means Stuart A. Miller, members of his family, trusts of which one or more of them are trustees or principal beneficiaries, and entities (including corporations, partnerships and limited liability companies) of which the Miller Family control or would be treated as beneficially owning a majority of the equity, as beneficial ownership is determined for purposes of the Exchange Act. Millrose means Millrose Properties, Inc., a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose Holdings means Millrose Properties Holdings, LLC, a Delaware limited liability company that is wholly-owned by Millrose. Millrose Subsidiaries means any subsidiaries of Millrose, including Millrose Holdings, any Property LLCs and any Other Subsidiaries, that may be created from time to time for the purpose of providing the HOPP’R to any Lennar Related Ventures or Other Customers. Millrose Tangible Assets means (A) from February 7, 2025 through (and including) the end of the first month following twelve (12) months after February 7, 2025: (i) the Company’s total assets (including cash and cash equivalents), less (ii) intangible assets, each determined on a consolidated basis in accordance with GAAP, less (iii) Non-Revenue Generating Assets to the extent not already included in (ii); and (B) thereafter: (i) the Company’s total assets (not including cash and cash equivalents), less (ii) intangible assets, each determined on a consolidated basis in accordance with GAAP, less (iii) Non-Revenue Generating Assets to the extent not already included in (ii), each determined on a non-consolidated basis in accordance with GAAP, as calculated by the Manager and reviewed by the Board. 11 Table of Contents Monthly Option Payment means the amount payable by Lennar to Millrose Holdings to maintain its Purchase Option with respect to a Property, which is paid monthly and be calculated on a daily basis as the sum of (i) the total value of the Property (with respect to any Transferred Assets and Supplemental Transferred Assets) or acquisition cost of the Property (with respect to any Future Property Assets) and (ii) the amount of reimbursements made by Millrose Holdings to Lennar to account for the cost of the Horizontal Development of the Property, less (x) the Takedown Prices paid by Lennar to Millrose Holdings and (y) any other payments or reimbursements paid by Lennar to Millrose Holdings (which for the Transferred Assets excludes deposits thereon), and then multiplied by the Applicable Rate as set forth in the Master Option Agreement. Where applicable, “Monthly Option Payment” may also mean this same concept, but as negotiated and used by or for (or in the context of agreements with) any Lennar Related Ventures or Other Customers. Mortgage means any Mortgage, pursuant to which a Property LLC mortgages a property to Millrose to secure the full and timely payment and full and timely performance of obligations under the Promissory Note, any other Mortgages executed by a Property LLC, the Pledge and any other documents executed to evidence or secure the payment of the Promissory Note, including any modifications, restatements, extensions, renewals and replacements of such documents. Multiparty Cross Agreement means any multiparty cross agreement between Lennar and Millrose Holdings (and/or any Property LLCs) that applies to any portion of the Transferred Assets, the Supplemental Transferred Assets or any Future Property Assets acquired pursuant to the terms of the Master Program Agreement and other Lennar Agreements, as further described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Multiparty Cross Agreement.” NAREIT means the National Association of Real Estate Investment Trusts. Nominating and Corporate Governance Committee means the Nominating and Corporate Governance Committee of the Board. Non-Revenue Generating Assets means any asset not associated with an income generation opportunity or owned real estate. For the avoidance of doubt, Non-Revenue Generating Assets shall exclude owned real estate with terminated or unexercised option contracts. NYSE means the New York Stock Exchange. Operating Principles means the structural enhancements reflected in the terms of the Lennar Agreements (and that are expected to be reflected in the terms of any HOPP’R agreements with any Lennar Related Ventures in the future) that are described in “Part I, Item 1. Business—Land Banking Reimagined.” They include (i) Future Property Assets to be acquired are to consist mostly of properties for which all approvals and entitlements required to allow Horizontal Development to begin have already been obtained; (ii) construction agreements are to contain provisions that are designed to ensure cost overruns on any Horizontal Development will be borne by the home builder; (iii) Future Property Assets must meet the Program Criteria in an effort to ensure that Millrose, through its subsidiaries, maintains a diversified Real Estate Portfolio across geographies, markets and home-types; (iv) all properties and Homesites comprising the Future Property Assets acquired pursuant to the Lennar Agreements are to be subject to pooling arrangements pursuant to one or more Multiparty Cross Agreements; (v) Millrose (through Millrose Holdings, the Property LLCs and any Other Subsidiaries) is to receive predictable, recurring payment of Monthly Option Payments as payment to maintain the purchase option to buy back the Transferred Assets, the Supplemental Transferred Assets or any Future Property Assets; and (vi) nothing in any HOPP’R agreements is to impede, impair or otherwise negatively impact Millrose’s ability to qualify for REIT status for U.S. federal income tax purposes. Option Deposit means the payments required to be made by Lennar to Millrose Holdings, pursuant to the Master Option Agreement in consideration for a Purchase Option with respect to the Transferred Assets, the 12 Table of Contents Supplemental Transferred Assets and any Future Property Assets, comprising (i) the Initial Deposit paid by Lennar in cash upon the execution of the Master Program Agreement and the Master Option Agreement, with respect to the Transferred Assets, and upon the execution of the relevant Project Addendum, with respect to the Supplemental Transferred Assets and any Future Property Assets, and (ii) the Additional Deposit that will be paid (A) as a call option upon exercise by Millrose Holdings at any time following the execution of the relevant Project Addendum in the event the Manager, in its reasonable judgment, determines that Millrose Holdings requires such additional capital to fund its ongoing business operations in the ordinary course and (B) as a termination fee on the date on which Lennar decides to terminate its Purchase Option prior to exercise with respect to particular Future Property Assets, whichever occurs earlier. For the avoidance of doubt, each of the Initial Deposit and the Additional Deposit (as either (A), (B) or a combination thereof) will not exceed 5% as calculated in the way described in the definitions of such terms, and the sum of the Initial Deposit and the Additional Deposit will not exceed 10% as calculated in the way described in the definitions of such terms (5% Initial Deposit plus 5% Additional Deposit). The Option Deposit is non-refundable and becomes fully earned, due and payable upon the execution of the Master Program Agreement and the Master Option Agreement, with respect to the Transferred Assets, and upon execution of the relevant Project Addendum with respect to the Supplemental Transferred Assets and any Future Property Asset. Where applicable, “Option Deposit” may also mean this same concept, but as negotiated and used by or for (or in the context of agreements with) any Lennar Related Ventures or Other Customers. Other Customers means any residential home construction or real estate development companies in the United States, excluding Lennar and any Lennar Related Ventures, that enter into agreements or other arrangements with Millrose (through any Other Subsidiaries) to use the HOPP’R. Other Subsidiaries means any subsidiaries of Millrose, other than Millrose Holdings and any Property LLCs, that may be created from time to time for the purpose of providing the HOPP’R to any Lennar Related Ventures or Other Customers. We expect that any Other Subsidiaries that Millrose may form or acquire in the future will be taxable business entities. Accordingly, notwithstanding Millrose’s intention to elect REIT status for U.S. federal income tax purposes, we expect that all of the land acquisition and development activity conducted in connection with providing the HOPP’R to our customers (including with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets for Lennar and potentially with respect to any Future Property Assets for any Lennar Related Ventures and Other Customers) will be operated by a taxable corporation and will be subject to U.S. federal income tax at the entity level. Owner means Millrose and Millrose Holdings collectively. Owner Party means Owner and affiliates of Owner collectively. Ownership limits means the limitations on ownership of Millrose’s stock set forth in our Charter that prohibit any person or entity, subject to certain exceptions, from owning, beneficially or by virtue of the applicable constructive ownership provisions of the Code, (i) more than 9%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or (ii) 9% in value of the outstanding shares of all classes or series of our stock, except for the Excepted Holder Limit set forth in our Charter for the Miller Family, which allows the Miller Family to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, up to 12.8% in the aggregate, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or the outstanding shares of all classes or series of our stock. Pause Period means periods of up to six months each during which all takedowns and Work construction deadlines for a Property shall be extended, no closings shall occur and no payments shall be made by Owner to Lennar under the Master Construction Agreement. Lennar shall be entitled to designate two pause periods of up to six months each with regard to a Property, if (a) the Burns Home Value Index for the metropolitan statistical area in which a Property is located shows a seasonally adjusted home sale pricing decline of 10% or more, (b) a 13 Table of Contents pandemic, epidemic or other public health emergency or other similar event occurs which does or is expected to materially and adversely impact Lennar’s ability to construct, market and/or sell residences on the Property, or (c) Lennar elects to designate a Pause Period in its sole discretion. Pause Period Designation Right means Lennar’s right pursuant to the Founder’s Rights Agreement to unilaterally decide to designate a Pause Period at any time in its sole discretion, as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” Phase I means an environmental site assessment report prepared for a real estate holding that identifies any existing or potential recognized environmental concern. Pledge means the Pledge and Security Agreement by Millrose Holdings in favor of Millrose, as described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off.” Pool Property means each property included in a Multiparty Cross Agreement in connection with the establishment of a pool with respect to certain properties. As to any pool with respect to any Transferred Assets and any Supplemental Transferred Assets, the aggregate sum of all Option Deposits Lennar has made, or is obligated to make, with respect to Properties in the pool shall not at any time exceed $50,000,000. As to any pool with respect to any Future Property Assets acquired pursuant to the Lennar Agreements, the aggregate sum of all Option Deposits Lennar has made, or is obligated to make, with respect to Properties in the pool shall not at any time exceed $25,000,000. Pools will be established with primary consideration given to diversity within pools across geographies, communities and home types. Predecessor Millrose Business means the business operations, including revenues and expenses, liquidity and capital resources, cash flows, balance sheet, statements of income and other information of Millrose prior to the Spin-Off, as derived from the financial statements of Lennar, since Millrose had no operations (or operating subsidiaries) of its own prior to the Spin-Off. Program means the program relating to the use by Lennar of the Recycled Capital HOPP’R pursuant to the Master Program Agreement. Program Criteria means certain predetermined criteria that Future Property Assets must meet, as set forth in the Master Program Agreement. Project Addendum means any Project Addendum, pursuant to which Millrose (through Millrose Holdings or any of its subsidiaries) and Lennar may subject any Transferred Assets, Supplemental Transferred Assets or Future Property Assets to the terms and provisions of the Master Program Agreement, the Master Option Agreement and the Master Construction Agreement. Promissory Note means the approximately $4.8 billion note from Millrose Holdings to Millrose that is secured by a pledge of all of the equity interests in the Initial Property LLCs and unrecorded mortgages on the Transferred Assets. The Promissory Note was issued in connection with the recapitalization of Millrose Holdings prior to the Distribution. The Promissory Note bears an interest rate of 7.5% per annum, compounded monthly, and interest payments are paid monthly (the amount of which is initially expected to be approximately $358 million annually). It is intended that the Promissory Note will be amended effective as of the date of the Supplemental Transferred Assets Transaction to increase the principal amount of the Promissory Note by approximately $0.2 billion and pledging the equity interests of the Supplemental Property LLCs and unrecorded mortgages on the Supplemental Transferred Assets. The interest with the estimate is expected to be approximately $379 million annually. Properties means the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets acquired pursuant to the Master Program Agreement collectively. 14 Table of Contents Property LLC includes all of our LLC subsidiaries that hold the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets through which Millrose Holdings provides the HOPP’R to Lennar, including as the context requires, (i) immediately following the Spin-Off, all of the 31 LLC subsidiaries of Millrose Holdings (“Initial Property LLCs”) and (ii) immediately following the Supplemental Transferred Assets Transaction, the 18 LLC subsidiaries of Millrose RCH Landco Ltd. (the “Supplemental Property LLCs”) and the Initial Property LLCs and (iii) thereafter, the Initial Property LLCs, the Supplemental Property LLCs and any additional LLC subsidiaries formed for the purposes of any Future Property Assets. Property Selection Services means, including under the Master Program Agreement, (i) an analysis of a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability and cost of financing for homebuyers, availability and prices of new homes compared to those of previously occupied homes, and demographic trends and (ii) with respect to each of the homebuilding markets in which Lennar acquires assets and develops Homesites, an analysis of the local market conditions and demographics, the specific supply and demand relationships reflective of local economic conditions, the projected absorption pace for home sales, sales prices and costs to build and deliver homes on a community by community basis. Property Use Objective means the intended objectives and uses for the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets that Millrose Holdings acquires at Lennar’s request pursuant to the Master Program Agreement. Consistent with the obligations of Millrose (through Millrose Holdings) pursuant to the Master Program Agreement, the intended objectives and use are limited to (i) holding the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets until Lennar exercises its Purchase Option to purchase them in accordance with the terms of the Master Option Agreement, or until those Purchase Options expire or are terminated without being exercised (or if Lennar defaults and loses its option), (ii) financing the Work that Lennar wishes to undergo on any Homesites, up to a certain predetermined budget, in accordance with the terms of the Master Construction Agreement, and (iii) to the extent applicable and requested by Lennar, facilitating any Lennar sales of completed homes by delivering the home and Homesite directly to home buyers to which Lennar has sold the homes (in which case, Lennar will indemnify Millrose for any issues relating to such direct delivery to home buyers pursuant to the Lennar Agreements). For the avoidance of doubt, Millrose Holdings’ Property Use Objective does not include (i) financing any home construction on any properties, (ii) performing (directly or through contracted third parties) any Horizontal Development on any properties other than through Lennar, or (iii) entering into any leases or other use/occupancy-related arrangements with respect to any properties. Proposed Project means Future Property Assets that have been proposed to be admitted to the Program pursuant to the Master Program Agreement. Proposed Project Report means the report that Lennar may from time to time present to Owner pursuant to the Master Program Agreement in connection with the proposed admission of Future Property Assets to the Program. Purchase Option means an exclusive option pursuant to the terms of the Master Option Agreement, as supplemented by the terms and provisions of any applicable Project Addendum, granted to Lennar to purchase any portion or all of the Transferred Assets and the Supplemental Transferred Assets and any future land acquisitions that Millrose (through Millrose Holdings or any other subsidiary) makes at Lennar’s request in connection with the HOPP’R provided to Lennar, in accordance with an agreed upon schedule of Homesite purchases and pricing, as contemplated by the Master Program Agreement. Where applicable, “Purchase Option” may also mean this same concept, but as negotiated and used by or for (or in the context of agreements with) any Lennar Related Ventures or Other Customers. Rating Adjustment means, for purposes of calculating the Applicable Rate, (i) 0% if Lennar’s credit rating is equal to Baa1, Baa2 or Baa3 by Moody’s Investor Services, Inc. (“Moody’s”), BBB+, BBB or BBB- by S&P Global Ratings (“S&P”) or BBB+, BBB or BBB- by Fitch Ratings, Inc. (“Fitch”) for a minimum of two out of 15 Table of Contents three of Moody’s, S&P and Fitch (collectively, the “Rating Agencies”), (ii) a decrease of 0.5% if Lennar’s credit rating is upgraded to A3 by Moody’s, A- by S&P or A- by Fitch by a minimum of two out of three Rating Agencies, with such Rating Adjustment to be further decreased by 0.25% for each incremental upgrade above A3 or A-, as applicable, by a minimum of two out of three Rating Agencies or (iii) an increase of 1.0% if Lennar’s credit rating is downgraded to Ba1 by Moody’s, BB by S&P or BB by Fitch by a minimum of two out of three Rating Agencies, with such Rating Adjustment to be further increased by 0.25% for each incremental downgrade below Ba1 or BB, as applicable, by a minimum of two out of three Rating Agencies. Rausch means Rausch Coleman Companies, LLC, a privately-held U.S. home builder. Real Estate Portfolio means the properties held by Millrose, comprised of (a) the Transferred Assets (b) the Supplemental Transferred Assets and (c) any Future Property Assets that Millrose (through Millrose Holdings, the Property LLCs or any Other Subsidiaries) may acquire pursuant to the agreements with Lennar or on behalf of any future customers (as applicable), including any Lennar Related Ventures or Other Customers, in the future, as further described in “Part I, Item 2. Properties—Description of Future Property Assets.” Recognition Agreement means the Recognition, Subordination and Non-Disturbance Agreement, by and among Millrose, Millrose Holdings, each Property LLC, U.S. Home, Lennar Homes Holdings and CalAtlantic as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Recognition, Subordination and Non-Disturbance Agreement.” Recycled Capital HOPP’R means the Homesite Option Purchase Platform, as adjusted and refined to be used as a self-financing reliable land acquisition and Horizontal Development solution intended to provide home builders with (i) access to lower or competitive cost of capital on an ongoing “recycled” basis and (ii) more certainty about having reliable, consistent and uninterrupted access to capital, through both periods of strong market conditions and periods of market downturn or continued periods of weakened market conditions, subject to the assumptions detailed in this Form 10-K. The self-financing, recycled capital and other key features of the Recycled Capital HOPP’R are made possible by the initial contribution of the Business Assets in return for equity, which allows us to use the proceeds from the payment of Option Deposits and the exercise of Purchase Options to finance acquisition of Future Property Assets and Horizontal Development for Future Property Assets without having to repay to Lennar the value of its initial contribution. Registration Rights Agreement means the Registration Rights Agreement, by and between Millrose and Lennar Corporation as described in “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Registration Rights Agreement.” REIT means a real estate investment trust for the U.S. federal income tax purposes. REIT Requirements means the requirements under sections 856 through 860 of the Code and the applicable U.S. Treasury regulations, including various (a) organizational requirements, (b) gross income tests, (c) asset tests and (d) distribution requirements. Risk Spread means, for purposes of calculating the Applicable Rate, the Bloomberg US Composite BBB BVAL Yield Curve 3-year Index BVABDB05 rate available on Bloomberg Screen BVABDB03 (or any successor page) at approximately 4:00 p.m., New York City time, on the business day immediately preceding the Calculation Date. If the abovementioned index is no longer available or if the calculation of such index is substantially changed, upon notification by either party of the inapplicability of the existing index, Lennar and Millrose shall negotiate in good faith to determine an appropriate replacement index. Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002. SEC means the U.S. Securities and Exchange Commission. 16 Table of Contents Secured Financing Collateral Consent Right means the Lennar’s right, pursuant to the Founder’s Rights Agreement, that Millrose is prohibited from granting or selling any security interest whereby the assets pledged pursuant to such security interest include Transferred Assets, Supplemental Transferred Assets or Future Property Assets held pursuant to the Lennar Agreements and Future Property Assets of Other Customers (i.e., mixing the assets into one collateral pool) without Lennar’s prior written consent, as described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” Securities Act means the Securities Act of 1933, as amended. Section 355(a) means Section 355(a) of the Code. Section 368(a) means Section 368(a) of the Code. Spin-Off means the partial, taxable spin-off of Millrose Properties, Inc., a previously wholly-owned subsidiary of Lennar, that was effected by distributing approximately 80% of the outstanding shares of Millrose common stock to holders of Lennar common stock on the Distribution Date. Supplemental Transferred Assets means all the Homesites and prospective Homesites acquired by Millrose in connection with the Supplemental Transferred Assets Transaction, using approximately $876 million of the Cash Contribution by Lennar as consideration. The Supplemental Transferred Assets included all of the land assets of Rausch (except for any Homesites with homes actively under construction). Supplemental Transferred Assets Transaction means the transaction between Millrose and Rausch, pursuant to which Millrose acquired the Supplemental Transferred Assets (through an acquisition of 100% of the stock of RCH Holdings, Inc., a newly formed parent holding company of Rausch) following the Spin-Off using approximately $876 million of the Cash Contribution by Lennar as consideration. Takedown Price means the total amount to be paid by Lennar to Millrose Holdings to exercise its Purchase Option with respect to the Transferred Assets, the Supplemental Transferred Assets or any Future Property Assets, which shall be negotiated between the parties with respect to each property and set forth in the applicable Project Addendum. Where applicable, “Takedown Price” may also mean this same concept, but as negotiated and used by or for (or in the context of agreements with) any Lennar Related Ventures or Other Customers. Takedown Schedule means an agreed upon schedule of purchases and pricing granted by Millrose Holdings and the Property LLCs to Lennar with respect to any Homesite or other properties comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets set forth in any Project Addendum and pursuant to the terms of the Master Option Agreement and as supplemented by the applicable Project Addendum. Where applicable, “Takedown Schedule” may also mean this same concept, but as negotiated and used by or for (or in the context of agreements with) any Lennar Related Ventures or Other Customers. Termination Fee means an amount to be paid by Millrose to the Manager in the event that the Management Agreement is terminated by Millrose without cause, equal to (A) if within or at the expiration of the Initial Term of the Management Agreement, two and a half (2.5) times the average annual Management Fee; (B) thereafter, including at the expiration of any renewal period, one and a half (1.5) times the average annual Management Fee. For termination for cause by Millrose pursuant to Section 14(b) of the Management Agreement, the Termination Fee shall equal the Management Fee that would be payable to the Manager for the period from the date of termination to the expiration date of such Initial Term or renewal period, as applicable, as described in the terms of the Management Agreement; or (C) if Millrose’s average annual (i) consolidated net income calculated in accordance with GAAP as reported in Millrose’s filings with the SEC, plus any taxes paid by Millrose or any subsidiaries of Millrose during such period, divided by (ii) average Millrose consolidated stockholders’ equity at the end of each fiscal quarter over the same period as reported in Millrose’s filings with the SEC, during the three year period (or the number of years since the Spin-Off date if less than three) preceding the effective termination date of the Management Agreement has been equal to or higher than 7% (the “Performance Goal”), 3.0 times the 17 Table of Contents average annual Management Fee earned by the Manager during the two-year period immediately preceding the most recently completed calendar quarter prior to the effective termination date of the Management Agreement, subject to a certification of the Board, to be provided within 60 days of its vote to perform a “Termination Without Cause” (as defined in the Management Agreement), that Millrose has achieved the Performance Goal (such certification not be withheld, conditioned to delayed in the event that the Board determines in good faith that the Performance Goal has been achieved). Transferred Assets means the current and future Homesite inventory described in “Part I, Item 2. Properties” other than the descriptions about Supplemental Transferred Assets and Future Property Assets. Treasury Regulations means regulations of the U.S. Treasury. TRS means a taxable REIT subsidiary, which is a fully taxable corporation that has jointly elected with the parent REIT to be treated as a taxable REIT subsidiary, defined under section 856 of the Code. Type 1 means, with respect to any future transactions that Lennar or any Lennar Related Venture presents to us in connection with their use of the HOPP’R, Future Property Assets that fully comply with the terms of the Lennar Agreements, including adherence to all the Operating Principles. Type 2 means, with respect to any future transactions that Lennar or any Lennar Related Venture presents to us in connection with their use of the HOPP’R, Future Property Assets that do not fully comply with the terms of the Lennar Agreements and may adhere only to some or none of the Operating Principles. U.S. Home means U.S. Home, LLC, a Delaware limited liability company wholly owned by Lennar Corporation. Vanguard means The Vanguard Group, Inc. or any of its affiliates. Work means certain construction services, which Lennar performs or will perform (or contracts or will contract third-party providers to perform) to complete all Horizontal Development on the Transferred Assets, the Supplemental Transferred Assets and any of Lennar’s Future Property Assets, as contemplated by the Master Construction Agreement and as supplemented by the terms and provisions of any applicable Project Addendum. For the avoidance of doubt, “Work” refers specifically to the Horizontal Development services Lennar is obligated to perform under the Master Construction Agreement. 18 Table of Contents BASIS OF PRESENTATION OF FINANCIAL AND OPERATIONAL INFORMATION Unless otherwise indicated, the historical financial information as of December 31, 2024 that is presented in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Millrose Properties, Inc. Combined Audited Financial Statements of the Predecessor Millrose Business of this Form 10-K is derived from the financial statements of Lennar, our parent company prior to the Spin-Off, for accounting purposes. The historical financial information presented (i) includes land inventory assets that represent the Transferred Assets, and related liabilities and operations from the Transferred Assets included in the Spin-Off (referred to as the “Predecessor Millrose Business”), but (ii) excludes the Supplemental Transferred Assets and any Future Property Assets acquired after the Spin-Off. The historical information also includes all costs directly attributable to the Predecessor Millrose Business. This financial information of the Predecessor Millrose Business may not be indicative of Millrose’s future performance as an independent, publicly traded company following the Spin-Off and does not necessarily reflect what the financial position, results of operations and cash flows would have been had Millrose operated as an independent company during the periods presented. The financial information of the Predecessor Millrose Business prior to Spin-Off represents a combination of entities under common control that have been ‘carved out’ of Lennar’s consolidated financial statements. Historically, financial statements of the Predecessor Millrose Business have not been prepared as it was not operated separately from Lennar. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the Combined Audited Financial Statements of the Predecessor Millrose Business for more information. Elsewhere in the Form 10-K, unless otherwise indicated, the financial and operational data is presented as of December 31, 2024 after giving effect to the transactions completed in connection with the Spin-Off, including the contribution of the Transferred Assets, and the Supplemental Transferred Assets Transaction. 19 Table of Contents AVAILABLE INFORMATION Our website is millroseproperties.com. We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. Our filings with the SEC are also available to the public from commercial document retrieval services and at the SEC’s website at http://www.sec.gov. Our Class A common stock is listed and traded on the New York Stock Exchange under the symbol “MRP.” Our reports, proxy statements and other information filed with the SEC can also be inspected and copied at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We also make available on our website all of the documents (including any amendments thereto) that we file or furnish with the SEC, free of charge, as soon as reasonably practicable after we electronically file such material with the SEC. Our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are also available on our website and in print free of charge to any stockholder who requests them. Requests should be sent by mail to our corporate secretary at our executive office at 600 Brickell Avenue, Suite 1400 Miami, Florida 33131. Information contained on our website is not incorporated by reference into this Form 10-K. We intend to disclose on our website any amendments or waivers to our Code of Business Conduct and Ethics that are required to be disclosed pursuant to Item 5.05 of Form 8-K. 20 Table of Contents Part I Item 1. Business General Millrose Properties, Inc. is a corporation incorporated under the laws of the State of Maryland on March 19, 2024 for the purpose of receiving the Business Assets from Lennar and becoming an independent publicly traded company. As of December 31, 2024, the Predecessor Millrose Business was wholly owned by Lennar. On February 7, 2025, Millrose completed a Spin-Off of the Predecessor Millrose Business from Lennar and became an independent publicly traded company listed on the NYSE. The Spin-Off was effected by the distribution of approximately 80% of the outstanding shares of Millrose common stock to holders of Lennar common stock on the Distribution Date. On February 10, 2025, Millrose completed an acquisition of land consisting of approximately 24,000 Homesites through the acquisition of 100% of the outstanding stock of RCH Holdings, Inc., a newly formed parent holding company of Rausch, for approximately $876 million in cash, which is net of option deposits funded by Lennar and other holdbacks. See “Part 1, Item 2. Properties” for more information on the Transferred Assets and Supplemental Transferred Assets acquired by Millrose in connection with the Spin-Off and the Supplemental Transferred Assets Transaction, and Note 8 to the Combined Audited Financial Statements of the Predecessor Millrose Business for more information related to the Spin-Off and the Supplemental Transferred Assets Transaction. We provide, through our subsidiaries, an operational and capital solution for home builders and land development companies to finance the acquisition and development of land assets through our Homesite Option Purchase Platform (known as the HOPP’R). The HOPP’R is a comprehensive suite of systems and procedures developed to operate and manage the acquisition, financing and development of land assets on a large scale. Millrose is a holding company without any operations of its own. Our operations are conducted through Millrose Holdings, a Delaware limited liability company and our wholly-owned operating subsidiary, the Property LLCs and Other Subsidiaries. We are externally managed by our Manager with personnel provided by our Manager and officers recommended by our Manager and appointed by our Board serving as all officers and employees of, and performing all business operations for, Millrose, Millrose Holdings, the Property LLCs and any Other Subsidiaries. For the year ended December 31, 2024, the Predecessor Millrose Business did not operate as a separate operating or reportable segment. Starting in the year ended December 31, 2025, Millrose will operate as one operating and reportable segment, Homesite Revenue, with properties geographically located in the following regions across the United States as of March 25, 2025: East (Alabama, Delaware, Florida, New Jersey and Pennsylvania) Central (Georgia, Illinois, Indiana, Kansas, Maryland, Minnesota, Missouri, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin) South (Arkansas, Oklahoma and Texas) West (Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington) Millrose intends to elect to be treated as a REIT for U.S. federal income tax purposes beginning with its taxable year ending December 31, 2025. Millrose Holdings intends to be treated as a TRS of Millrose. Accordingly, Millrose Holdings will be subject to full entity-level taxation in connection with its business operations. Similarly, we expect that any other TRSs that Millrose may form or acquire in the future will be taxable business entities. Because all of the land acquisition and development activity in connection with providing the HOPP’R to our customers (including with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets for Lennar and with respect to any potential Future Property Assets for any Lennar Related Ventures and Other Customers) will be conducted through one or more TRSs, we anticipate that all such activity will be subject to U.S. federal income tax at the entity level. 21 Table of Contents Overview of Millrose’s Business Objectives Millrose’s business is to provide financing of land acquisition and Horizontal Development through the HOPP’R to home builders and land developers, based on a unique recycled capital model intended to accelerate home builders’ land light strategies either through the Lennar Agreements or through other agreements with potential future Lennar Related Ventures and Other Customers that are negotiated on Millrose’s behalf by our Manager. Following the Spin-Off, we have initially provided the Recycled Capital HOPP’R, principally to Lennar, which is designed to provide Lennar with reliable, consistent and uninterrupted access to capital, even during periods of market downturn or continued periods of depressed market conditions, subject to the assumptions and other risks described in this Form 10-K. Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, but there is no guarantee that Millrose will continue to be successful in negotiating agreements with such customers and there is no guarantee that Millrose will be able to secure any business arrangements with any home builders outside of Lennar in any given timeframe. Our Recycled Capital HOPP’R is a result of the initial contributions of the Business Assets from Lennar, which allows us to use the proceeds from the payment of Option Deposits and the exercise of Purchase Options to finance the acquisition of Future Property Assets and the Horizontal Development of Future Property Assets without having to repay the value of the initial contribution. This cycle is expected to repeat, allowing us a steady flow of capital, assuming Lennar’s continued and timely exercise of the Purchase Options on the timelines set forth in the applicable Project Addenda and continued payments of Option Deposits when Future Property Assets are acquired pursuant to the Lennar Agreements. This self-financing reliable cycle is a unique feature of Millrose’s solution to traditional Land Banking, and is made possible by (i) the perpetual use of the HOPP’R to operate and manage the acquisition, financing and Horizontal Development of land assets on a large scale and (ii) Lennar’s initial contribution of the Business Assets in return for equity — allowing Millrose access to assets and cash to finance new land acquisitions without having to repay the initial contribution. This Recycled Capital HOPP’R is intended to be accessible to all customers in the residential real estate industry, not just limited to Lennar, and the features unique to the Recycled Capital HOPP’R are designed to allow Millrose to continue financing new transactions with customers both in times of strong market conditions and times of market downturns, therefore supporting the reliable and consistent nature of the structure. The ability of Millrose to offer perpetual land acquisition and Horizontal Development financing solutions through the Recycled Capital HOPP’R distinguishes Millrose’s business from those that engage in traditional Land Banking, which is often required to distribute land sale proceeds to investors. Thus, while traditional Land Banking providers generally cannot engage in additional Land Banking without raising new investor funds, leaving them vulnerable to market dynamics and investor preferences, Millrose’s recycled capital structure should provide home builders with consistent access to capital, even during periods of market downturn or continued periods of depressed market conditions, subject to the assumptions and other risks described in this Form 10-K. However, there is no guarantee that this financing model will be fully self-financing. We entered into the Credit Agreement, which provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion, and may seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers. However, there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit under the Founders’ Rights Agreement. Millrose Holdings provides the Recycled Capital HOPP’R to Lennar pursuant to the Lennar Agreements and holds the Transferred Assets and the Supplemental Transferred Assets received in the Spin-Off through the Property LLCs. Subject to the Manager Diligence Obligations, Millrose is required to provide the HOPP’R for 22 Table of Contents the Future Property Assets of (i) Lennar and (ii) any Lennar Related Venture that meets the requirements of the Operating Principles, provided that the Lennar Related Venture has an acceptable risk profile with respect to its creditworthiness and agrees to terms substantially similar to the Lennar Agreements. For any Future Property Assets of Lennar or any Lennar Related Venture that do not meet the requirements of the Operating Principles or do not satisfy the Manager Diligence Obligations, we may decide to provide the HOPP’R under the terms as determined by our Manager. Millrose Holdings provides the HOPP’R to Lennar through the Property LLCs. Millrose Holdings may also provide the HOPP’R to Lennar Related Ventures (with approval from Lennar, to be provided at Lennar’s discretion) or Millrose may provide the HOPP’R to such Lennar Related Ventures through one or more Other Subsidiaries as determined by Lennar and our Manager. We also intend to offer other types of HOPP’R arrangements to potential customers who may not want to engage us for the Recycled Capital HOPP’R, which we seek out on our own (through our Manager) for purposes of diversification and scaling business growth. Our Manager negotiates any such arrangements individually on an ad hoc basis. Even if not all of Millrose’s customers will use the Recycled Capital HOPP’R, the HOPP’R has the flexibility to evolve and be further refined with different features to fit each customer’s needs. There is no certainty as to what the terms and arrangements of such agreements may be, but in some cases, we expect they may share certain characteristics and terms seen in more traditional Land Banking arrangements that are commonly used in the market today, which are influenced by, and subject to, market conditions. In some cases, new customers may also negotiate with our Manager to transfer their already-owned properties to Millrose in exchange for Millrose equity as a way to participate in Millrose’s model. Regardless of the combination of features any customer may desire to negotiate with Millrose, the HOPP’R is designed to provide at its core a sophisticated, streamlined and professional approach to land acquisition and Horizontal Development financing for home builders and developers in the residential real estate industry that was previously exclusively for the benefit of Lennar. To the extent we provide the HOPP’R to any Other Customers, it will be done through Other Subsidiaries and pursuant to agreements that will be negotiated on behalf of Millrose by our Manager. Additionally, in the event that Millrose provides the HOPP’R to Other Customers, it will likely need third-party financings to do so, and we may be limited in our ability to seek additional financing (in the event our existing sources of capital are insufficient) if it would cause our debt to equity ratio to exceed the Debt to Equity Ratio Limit unless we obtain the prior approval of Lennar. In no event will the HOPP’R be provided to Other Customers through Millrose Holdings or any Other Subsidiaries that provide the HOPP’R to Lennar. In all cases, and subject to Lennar’s Capital Priority Right, the proceeds received from the payment of Option Deposits and the exercise of Purchase Options from providing the HOPP’R to customers through Millrose Holdings and any Other Subsidiaries are available to the Millrose Subsidiaries to finance additional Future Property Assets acquisitions that can be improved and developed by Millrose and purchased as finished Homesites by our customers on a “just in time” basis, while a portion could be used to repay the principal on the Promissory Note. Millrose Holdings and Other Subsidiaries distributes to Millrose (subject to limitations on the portion of Millrose’s income that can be dividends in compliance with the REIT Requirements) (i) net earnings generated from the Monthly Option Payments after payments for taxes and expenses (including the Management Fee) and (ii) monthly interest payments on the Promissory Note, and such amounts are then distributed by Millrose as dividends to Millrose’s stockholders, consistent with or in excess of the amount that would satisfy applicable REIT Requirements. The continued sustainability of Millrose’s self-financing recycled capital business model, which is intended to provide us with reliable, consistent and uninterrupted access to capital, is contingent in the first instance on Lennar and any Other Customers electing to exercise their land purchase options. Given that the Transferred Assets that Lennar contributed to Millrose in the Spin-Off comprise a substantial portion of the current and future Homesite inventory that Lennar plans to use for the construction and sale of homes, we expect that Lennar will consistently exercise its options to purchase Homesites from us in order to continue its business of being a home builder. However, Lennar is under no obligation to exercise its options, and we would have no ability to force Lennar to purchase Homesites if it decided not to exercise the options it has pursuant to the Lennar Agreements, which is possible in the event of a significant downturn in the market. Additionally, Millrose can request (and 23 Table of Contents Lennar cannot unreasonably deny such request) that Lennar build homes on behalf of Millrose on any Homesites for which it has forfeited or terminated its Purchase Options. As there is generally a stronger market to sell completed homes compared to Homesites, we should be able to sell such completed homes to generate additional capital, although there is no guarantee we would be able to achieve such sales. Such construction and the subsequent sale to the third parties would require additional time and cost, including hiring personnel and providing the capital to build the homes, that will be borne by us. The price for which we can sell homes to third parties may be significantly less than the amounts of our investments. Absent option exercises by Lennar and Other Customers, Millrose’s self-financing recycled capital business model may still be sustained by supplementing customer option exercises with various alternative transaction contingency options, such as sales of homes to third parties, that would help in ensuring that Millrose will continue to replenish its capital reserves. Our revolving credit facility under the Credit Agreement and any additional debt financing we may seek to pursue may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers. However, there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit under the Founders’ Rights Agreement. Further, Millrose has the ability, subject to market and other conditions, to issue additional equity to generate additional capital, which would allow us to replenish its capital reserves. However, there is no guarantee that we would be able to achieve additional financing on acceptable terms or at all, or that our common stock will always hold sufficient value for equity raises to be viable. Land Banking Reimagined Reimagining Land Banking as an Asset Class Millrose envisions a transformation in the landscape of Land Banking, pioneering a recycled capital vehicle tailored for its income-generating real estate asset class, while aiming to address key challenges prevalent in the Land Banking industry. The HOPP’R is a new type of land acquisition and Horizontal Development financing model that strives to address all of the concerns of traditional Land Banking—excessive risk, lack of readily available, sufficient capital and heavily negotiated, bespoke agreements. In prior iterations of Land Banking, the investment opportunity remained largely exclusive to private equity and institutional investors. Typically, these ventures financed longer-duration, riskier land assets, fraught with inherent market risks and the looming threat of cost overruns, which could severely impact land bank returns and viability. Moreover, such models were often associated with undercapitalized, risky home builders, and were seen more as a risk mitigation strategy rather than a robust source of capital to the home builder. The land bank’s fragmented capital pool further exacerbated the model’s challenges, particularly evident in more volatile market environments. In contrast, we believe Millrose heralds a new era in financing the acquisition and development of land. As the first pure-play publicly traded vehicle offering large-scale recycled capital financing of land acquisition and Horizontal Development using the HOPP’R, which reimagines Land Banking investment opportunities as an asset class, it allows investors (not just private equity funds) to participate in this asset class. Focused on geographically diversified, fully entitled, shorter-duration assets, the Recycled Capital HOPP’R aims to effectively mitigate market risks. The Master Option Agreement with Lennar features (and option agreements that may be entered into with Lennar Related Ventures and Other Customers may feature) upfront deposits, potential termination fees, guaranteed Horizontal Development costs and defined takedown schedules, increasing the potential for consistent profits and returns for stockholders. The Recycled Capital HOPP’R also incorporates mechanisms such as cross-termination of assets within a pool under the Multiparty Cross Agreement, disincentivizing Lennar from terminating option agreements prematurely. Similar agreements may be entered 24 Table of Contents into with Lennar Related Ventures and Other Customers in the future. The Master Construction Agreement, and similar agreements that may be entered into with Lennar Related Ventures and Other Customers, shift the risk of cost overruns to the home builder, enhancing Millrose’s overall stability. As a recycled capital vehicle designed to navigate various market environments, the HOPP’R is intended to be resilient and dependable, poised to redefine the dynamics of Land Banking as an asset class. Functioning as a critical source of capital for Lennar, we believe Millrose will facilitate Lennar’s (and possibly other home builders’) endeavors to maintain and expand its land light strategy. Subject to the Manager Diligence Obligations, Millrose is required to provide the HOPP’R for the Future Property Assets of Lennar that meet the requirements of the Operating Principles. This streamlined process is intended to free Lennar to potentially find more land transactions knowing that Millrose is available to finance these transactions. Furthermore, we believe Millrose is equipped to finance land acquisition and Horizontal Development for Lennar in all areas where Lennar operates. By offering Lennar this scale and reliability, Millrose seeks to help Lennar acquire additional properties while accelerating its land light strategy. Risk Mitigation Millrose was created with a core focus on mitigating risks inherent to Land Banking, underpinned by its robust Operating Principles, designed to safeguard investor interests, allowing Millrose to provide the Recycled Capital HOPP’R to Lennar and certain Lennar Related Ventures. The Operating Principles, detailed under “—The Operating Principles” below, provide various risk mitigation features. With the duration of assets potentially constraining a land bank’s capacity to fund its Land Banking portfolio effectively, the Recycled Capital HOPP’R adopts a proactive approach to portfolio construction, meticulously aligning cash inflows and outflows in an attempt to mitigate duration risk and support sustained financial stability. Additionally, Millrose seeks to address the possibility of entitlement delays, stemming from government approvals, by structuring deals Millrose believes have minimal approval risk, bolstered by stringent underwriting criteria and comprehensive due diligence processes. Development cost risk poses another significant concern to land banks, with the specter of cost overruns threatening to disrupt budgeted expenses. Millrose will mitigate such risk by making home builders responsible for all cost overruns, thereby protecting itself from cash flow vulnerabilities. Regarding termination risk, wherein a home builder may prematurely terminate option contracts, Millrose implements measures to disincentivize such actions by Lennar and potentially Lennar Related Ventures and Other Customers in the future, imposing forfeiture of deposits and termination fees, while obligating the home builder to complete the Homesites’ development. Additionally, pooling communities allows Millrose to use multiple properties as collateral for option contracts so that premature termination of one option contract results in the home builder losing access to the other communities in the same pool. Development schedule risk presents yet another challenge for traditional Land Banking, with projects potentially missing development timelines and delaying monetization. In an effort to mitigate this, under the Lennar Agreements (and any similar agreements with Lennar Related Ventures and Other Customers), Millrose receives current income in the form of Monthly Option Payments and continues to receive Monthly Option Payments in the event of project delays, with the goal of generating yield for stockholders and maintaining financial resilience. Furthermore, to mitigate the risk of capital constraints and financing challenges potentially impeding a home builder’s ability to comply with takedowns, Millrose seeks to offer the HOPP’R to well-capitalized, high-quality home builders and land developers that will execute agreements similar to the Lennar Agreements, although there is no guarantee that such agreements will be finalized. We believe that the Operating Principles are key features in providing the Recycled Capital HOPP’R while maintaining a low-risk business model. 25 Table of Contents The Operating Principles The following is a summary of Millrose’s Operating Principles, and how they have been reflected in the Lennar Agreements. The descriptions of the Lennar Agreements are not comprehensive; for more information about the terms and provisions of the Lennar Agreements, see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar.” In most cases, Future Property Assets to be acquired are to consist of properties for which all discretionary approvals and entitlements to allow Horizontal Development to begin soon after the acquisition of the land have already been obtained. • This requirement is designed to mitigate the risk of potential land development delays and regulatory uncertainties, as well as risks associated with changes in local regulations or zoning ordinances that may result in unforeseen obstacles to development. Moreover, we believe this Operating Principle will result in shorter deal durations, streamline the development process and help enable home builders to commence development of the land without the risk of approval delays and thereby further optimize time and resources. Ultimately, we believe approved and permitted land assets should enhance investor confidence in the cash conversion cycle. • This is already the case with most of the Transferred Assets and the Supplemental Transferred Assets, and the Master Program Agreement includes provisions along with a separate set of Program Criteria that generally require this for any Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements. Future Property Assets must meet certain predetermined criteria in an effort to ensure that we maintain a diversified Real Estate Portfolio. • Diversification is important as a real estate risk mitigation tool in general, and specifically, for Millrose. Because the properties within the Real Estate Portfolio are spread across different regions, we believe Millrose should be able to safeguard against adverse localized economic events that may impact a particular market. Similarly, diversification across various markets and property types should enable more flexibility for Millrose to capitalize on opportunities and adapt to changing home buyer preferences. However, there is a risk that Future Property Assets may not be as diverse as the Transferred Assets and the Supplemental Transferred Assets. • The criteria that Lennar is obligated to follow are set forth in the Program Criteria set forth in the Master Program Agreement and will apply to all Future Property Assets that Millrose Holdings acquires pursuant to the Lennar Agreements. • Millrose has the benefit both of property evaluations by Lennar site acquisition personnel and the Manager Diligence Obligations with regard to each Future Property Asset. Future Property Assets to be acquired are to be subject to a nonrefundable deposit as consideration for the grant of the purchase option of such Future Property Asset. • Requiring a nonrefundable deposit as consideration for the grant of home builder’s purchase option of the Future Property Asset, which should be paid in part at the outset when a Future Property Asset is acquired from or on behalf of a home builder and in part when Millrose requires the capital or when the home builder terminates its purchase option as a termination fee, is designed to (i) provide the home builder with additional incentive not to default on its purchase options and pay the Monthly Option Payments and (ii) provide Millrose with sufficient capital to maintain its operations and invest in additional Future Property Assets for such home builder (although Millrose may need to secure additional third-party financing or raise capital through equity or debt issuances in the future if Millrose’s existing sources of capital are insufficient). 26 Table of Contents • Pursuant to the Lennar Agreements, Lennar paid the Initial Deposit portion of the Option Deposit with respect to the Transferred Assets upon the execution of the Master Program Agreement and Master Option Agreement. Lennar is also obligated to pay the Initial Deposit portion of any Option Deposit with respect to the Supplemental Transferred Assets and any Future Property Assets upon the execution of the applicable Project Addendum and will be obligated to pay the Additional Deposit portions of the Option Deposits with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets as set forth in the Lennar Agreements. Construction agreements are to contain provisions that are designed to ensure cost overruns on any Horizontal Development will be guaranteed by the home builder. • Such an arrangement aims to shield Millrose from unexpected expenses that may arise during the Horizontal Development process. With the home builder bearing the responsibility for any cost overruns relating to Horizontal Development on the properties, we believe Millrose will be able to operate with greater predictability and with more confidence that its financial expectations will be substantially met (or even if it does not, that it will be within an acceptable and foreseeable range of such expectations). This Operating Principle aims to minimize financial risks and to maximize the likelihood that developments stay within time and budgetary limits and should, in our view, result in stable and consistent financial returns. • As reflected in the Master Construction Agreement, as part of the Lennar Services, Lennar has agreed to cover any cost overruns with respect to any Horizontal Development for the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets. Lennar has also agreed to maintain insurance, including general liability insurance, to cover certain liabilities that may arise with respect to its Horizontal Development projects, among others. Lennar will also solely be responsible for any costs related to home construction. Properties and Homesites comprising the Future Property Assets are to be subject to pooling arrangements to create cross-termination. • We believe that embedding cross-termination rights in Millrose’s option contracts with any customer who desires the Recycled Capital HOPP’R is a risk mitigation tool that is beneficial to Millrose. The pooling of communities, as required by the Lennar Agreements, is intended to allow Millrose to use multiple properties as collateral for option contracts, thereby spreading the risk across various assets. In the event that one community underperforms or faces difficulties, Lennar would risk losing access to the other communities in the same pool if it tried to walk away from the underperforming community in that pool. Future Property Assets that adhere to the Operating Principles would be pooled generally using the same principles as those used to pool the Transferred Assets and the Supplemental Transferred Assets. For more information about how Transferred Assets and the Supplemental Transferred Assets are pooled and any Future Property Assets adhering to the Operating Principles will be pooled, see “Part I, Item 2. Properties—Description of the Transferred Assets and the Supplemental Transferred Assets—Pooling of the Transferred Assets and the Supplemental Transferred Assets” and “Part I, Item 2. Properties—Description of Future Property Assets—Pooling of Future Property Assets.” We expect this strategy may also help Millrose’s our ability to negotiate more favorable terms and secure financing from lenders in the future, to the extent external financing is needed. However, there is no guarantee that Future Property Assets acquired for Other Customers will be subject to the pooling requirement. • Pursuant to the Lennar Agreements, the Transferred Assets and the Supplemental Transferred Assets are pooled into 30 pools consisting of an average of 29 properties each. Each property included in any Future Property Asset acquired pursuant to the Lennar Agreements will be pooled pursuant to one or more Multiparty Cross Agreements, which identifies the pooled communities and sets forth the rights 27 Table of Contents that Millrose and its subsidiaries have in the event Lennar decides to terminate a purchase option (subject to certain exceptions, such as the fee building exemption, which is described further in “—Millrose’s Operational Agreements”). Millrose (through Millrose Holdings, the Property LLCs and Other Subsidiaries) expects to receive predictable, recurring Monthly Option Payments in order to maintain the purchase options to buy back the Transferred Assets, the Supplemental Transferred Assets or any Future Property Assets. • This arrangement is designed to provide a predictable and stable source of income for Millrose, which we believe is essential for consistent dividend distributions to our stockholders. With Monthly Option Payments paid by the home builder at consistent intervals, we expect Millrose Holdings will be able to better manage its working capital for maintaining operations (including payment of taxes and other expenses, including the Management Fee). Millrose Holdings, the Property LLCs and Other Subsidiaries will distribute to Millrose (i) net earnings generated from the Monthly Option Payments after payments for taxes and expenses (including the Management Fee) and (ii) monthly interest payments on the Promissory Note (which is currently approximately $358 million annually based on a 7.5% interest rate), and such amounts will then be distributed by Millrose as dividends to our stockholders, consistent with or in excess of the amount that would satisfy applicable REIT Requirements. We expect these fixed income-like payments may also act as a steady financial foundation for lenders in the future, to the extent external financing is needed. We expect any future HOPP’R agreements pursuant to which we will provide the Recycled Capital HOPP’R will include a substantially similar arrangement. • The Master Option Agreement with Lennar obligates Lennar to pay to Millrose Holdings the Monthly Option Payment to maintain its exclusive option to purchase back the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets in accordance with the Lennar Agreements. Nothing in any of the Lennar Agreements is intended to impede, impair or otherwise negatively impact Millrose’s ability to qualify for REIT status for U.S. federal income tax purposes. • Millrose’s intended REIT status and externally managed operating structure is designed to help minimize administrative burdens and allow Millrose to continually reinvest land sale proceeds to drive new business. Millrose intends to elect to be treated as a REIT for U.S. federal income tax purposes, beginning with its first taxable year for the year ending December 31, 2025. Millrose’s intended REIT status and its externally managed operating structure and relationship with our Manager aim to minimize the administrative burdens on Millrose, which we believe help enable our Manager to focus more on strategic relationships with Lennar and other customers. Additionally, we believe Millrose’s position fosters greater flexibility in decision-making, allowing Millrose to pursue opportunities to provide the HOPP’R to customers without being constrained by shifts in investor sentiments and market conditions. In light of these considerations, Millrose Holdings seeks to continuously deploy a portion of its capital into financing new HOPP’R transactions. We expect this approach also promotes efficiency by maximizing the utilization of available funds, thereby minimizing cash drag and idle capital, further contributing to the goal of providing us with stable, predictable returns over an extended period. • The Lennar Agreements were designed with the goal of ensuring that none of the provisions in the Lennar Agreements will negatively impact Millrose’s ability to qualify for REIT status for U.S. federal income tax purposes. Land Banking as a Solution for Home Builders’ Land Light Strategies Traditional Land Banking has generally been a deal-by-deal off-balance sheet financing structure whereby a Land Banking provider (separate from the home builder itself) purchases fee title to a land parcel, and then enters 28 Table of Contents into a purchase option agreement with a home builder to sell the land parcel back once the land parcel becomes fully developed Homesites. The purchase option agreement may be secured by a nonrefundable option fee paid by the home builder. The land parcel may or may not have all permits, approvals and entitlements at the time of closing, and the time from when the land is purchased by the land bank until the last Homesite is sold to home builders can be protracted for many years. Traditional Land Banking arrangements may also involve a construction agreement by which the Land Banking provider pays the home builder, as the contractor, to develop the property at a fixed or guaranteed cost and generally lack asset diversity running the risk that a market downturn in one region could lead to multiple customers with purchase option contracts opting not to exercise their options. In traditional Land Banking, customers may walk from a property or “cherry pick” assets if there is more than one property land banked at a time, creating risk and leaving the land bank responsible for finding new buyers for less-desirable properties. At times of rising demand for finished Homesites, home builders are faced with the challenge of securing land at rising prices. The land acquisition costs and the Horizontal Development phase represent the main source of capital inefficiency given the long duration of time involved, coupled with the amount of capital required to fund land acquisition and Horizontal Development. An illustrative average home building lifecycle comprises the following main phases: Phase 1 – Land Acquisition and Approval (generally 6-60 months): The first phase involves the identification and acquisition of and the receipt of entitlements, approvals and permits for the land, which is a time-intensive process and includes zoning and permitting risks. This part of the process involves obtaining approvals to develop the property in accordance with land zoning and development building codes. The Homesite yield on any given property is a function, in part, of the permitted zoning and development building regulations. At times, a home builder will identify and acquire land which has already been partially or fully approved or entitled. Phase 2 – Property Acquisition, Entitlement and Horizontal Development (generally 6-60 months): The second phase involves completing the land purchase and Horizontal Development, which lays the groundwork for building homes. This is where Millrose enters the development process. Horizontal Development includes installing all utilities and infrastructure required to build homes in a community, including drainage, sewage, water lines, roads, sidewalks, utility lines, grading and landscaping. Sometimes such infrastructure can also include the construction of recreational facilities, common area elements and other amenities. The land is usually purchased before or when Horizontal Development can commence. Therefore, this phase is both time- and capital-intensive for the home builder. Phase 3 – Sale and Home Construction Development (generally 4-14 months to complete the first home): Once the Horizontal Development is substantially completed, the third phase involving the construction of homes can begin. Typically, the home builder is responsible for constructing the home, completing utility connections to the homes and installing landscaping, all at its cost. Building the actual home is referred to as “home construction” or “vertical development” and is much less time-intensive than Horizontal Development. In some cases, the home builder may undertake construction work before purchasing the Homesite or without even purchasing the Homesite, in which case the Land Banking provider may be asked to deliver the Homesite and the completed home directly to the ultimate home buyer. Following the evolution of the housing market since the global financial crisis of 2007-2008, there is a growing trend of home builders to pursue a land light strategy, which allows home builders to minimize their investment in land acquisition and Horizontal Development in favor of finding “just in time” sources of land inventory. The adoption of a land light strategy typically offers compelling advantages to home builders in today’s competitive real estate landscape. Transitioning to a land light model allows home builders to own less land while relying more heavily on third parties for their Land Banking needs. By relying on land owned by others, home builders can conserve valuable capital that can be allocated to other critical areas of the business, such as expanding into new markets and regions, innovating, integrating technology and/or enhancing stockholder returns through the payment of dividends and stock buybacks. It may also extend a home builder’s 29 Table of Contents capital base in the pursuit of securing more land for future development. Furthermore, a land light strategy can generally facilitate a faster time to market for home builders. Land Banking meets this growing demand for ways to maintain a land light strategy and “just in time” operating model, and most major home builders in the United States are employing some form of Land Banking strategy today. Future HOPP’R Arrangements with Lennar and Lennar Related Ventures Millrose’s business arrangements are primarily pursuant to the Lennar Agreements, which seek to provide Lennar with the Recycled Capital HOPP’R with respect to the Transferred Assets. The properties in the Transferred Assets and the Supplemental Transferred Assets are expected to have a short cash conversion cycle. Lennar has offered and we expect that Lennar will offer additional transactions to us in the form of Future Property Assets that we would acquire pursuant to the Lennar Agreements, and Lennar has referred and we expect that Lennar will refer any Lennar Related Ventures interested in the HOPP’R to us. However, there is no certainty as to when, how often and to what extent this will occur. Any future transactions that Lennar or any Lennar Related Venture presents to us will be in one of two categories: • Type 1: Those that fully comply with the terms of the Lennar Agreements, including adherence to all the Operating Principles; and • Type 2: Those that do not fully comply with the terms of the Lennar Agreements and may adhere only to some or none of the Operating Principles. We are obligated to accept any Future Property Assets presented to us by Lennar or any Lennar Related Venture that fit within Type 1 and satisfy the Manager Diligence Obligations, provided that we have sufficient capital to do so, as calculated in accordance with the terms of the Master Program Agreement, and provided that such Lennar Related Ventures has an acceptable risk profile with respect to its creditworthiness. If we do not have sufficient capital, despite Lennar’s Capital Priority Right, then the obligation may be delayed until we do have sufficient capital to acquire the Future Property Assets. These acquisitions are governed by the Lennar Agreements with respect to any acquisitions done for Lennar and are governed under separate agreements with respect to any acquisitions done for a Lennar Related Venture. We expect agreements for a Lennar Related Venture to have substantially the same terms as the Lennar Agreements (including adherence to all the Operating Principles) but not to be covered under Lennar’s Guaranty and not to include the Monthly Option Payment fee rate matching provision. For Future Property Assets that fall within Type 2, we may, at our Manager’s discretion, accept any transactions presented to us. The terms of any Type 2 transactions from Lennar are individually negotiated on a case-by-case basis between Lennar and our Manager and may be governed by separate HOPP’R agreements and not the Lennar Agreements. The terms of any Type 2 transactions from any Lennar Related Ventures are also individually negotiated on a case-by-case basis between the Lennar Related Venture and our Manager and are governed under separate agreements. The terms of any such agreements with Lennar or any Lennar Related Venture may be different from the terms in the Lennar Agreements, and the HOPP’R we provide to Lennar or to a Lennar Related Venture in Type 2 may not be the same Recycled Capital HOPP’R that we provide pursuant to the Lennar Agreements. Millrose seeks to provide the HOPP’R to each customer through a separate subsidiary. For example, Millrose Holdings provides the Recycled Capital HOPP’R to Lennar through the Property LLCs. Millrose Holdings may also provide the HOPP’R to Lennar Related Ventures (with approval from Lennar, to be provided at Lennar’s discretion) or Millrose may provide the HOPP’R to such Lennar Related Ventures through one or more Other Subsidiaries as determined by Lennar and our Manager. To the extent we provide the HOPP’R to any Other Customers, it is done through Other Subsidiaries and pursuant to agreements that are negotiated on behalf of Millrose by our Manager. Additionally, in the event that Millrose provides the HOPP’R to Other Customers, it will likely need third-party financings to do so. We have a revolving credit facility under the Credit Agreement and may seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers, but there is no guarantee that such 30 Table of Contents sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit. In no event will the HOPP’R be provided to Other Customers through Millrose Holdings or any Other Subsidiaries that provide the Recycled Capital HOPP’R to Lennar. Any capital held in Millrose Holdings to be used to fund future HOPP’R transactions for Lennar and certain Lennar Related Ventures is subject to the Capital Priority Right as set forth in the Founder’s Rights Agreement. Lastly, under the Founder’s Rights Agreement, Lennar’s Applicable Rate Adjustment Right allows Lennar to adjust its Applicable Rate for Proposed Projects initiated during the 180 day period after a HOPP’R or other arrangement is entered into for any rate lower than Lennar’s agreed upon between Millrose and any Lennar Related Ventures or Other Customers. See “—Millrose’s Operational Agreements” for more information. In accordance with the Lennar Agreements, Lennar is under no obligation to provide us with any new transactions and opportunities (in either Type 1 or Type 2). This means that, unless we receive substantial new transaction opportunities from Lennar, Lennar Related Ventures or Other Customers, we will not have any active customers utilizing the HOPP’R following the complete turnover of the Transferred Assets and the Supplemental Transferred Assets. As such, part of our business strategy is to seek additional customers that wish to contract with us to utilize the HOPP’R in order to diversify our customer base and grow our business. Potential Future HOPP’R Arrangements with Other Customers We seek to provide the HOPP’R to Other Customers as part of our diversification and growth strategy. It is KL’s responsibility, as our Manager, under the Management Agreement to find, identify, evaluate and negotiate with any potential Other Customers. Agreements with Other Customers are individually negotiated on Millrose’s behalf by our Manager (and such agreements may not include the same features as the Recycled Capital HOPP’R). KL has substantial Land Banking experience, and we believe KL as our Manager is well-positioned to evaluate the relative risks and the potential returns when negotiating these transactions. For each transaction with Other Customers, our Manager must satisfy the Manager Diligence Obligations and has full discretion to negotiate the applicable terms and arrangements. The terms of such agreements and arrangements may be vary, and Other Customers may be unwilling to agree to any of our Operating Principles. As a result, the HOPP’R we provide to Other Customers may be very different from what we will provide to Lennar. The arrangements around providing the HOPP’R in these cases may instead share the characteristics and terms of more traditional Land Banking arrangements that are commonly used in the market today (i.e., there will likely not be any assurance to such home builders that Millrose will be able to provide them with available capital during periods of market downturn or continued periods of depressed market conditions). In all cases, Millrose will provide the HOPP’R and all other similar arrangements to its customers (including with respect to any acquisitions of Future Property Assets for any customer, including Lennar) in accordance with Millrose’s Operating Guidelines described below under “—Millrose’s Operating Guidelines” and set forth in the Management Agreement, including, but not limited to, the Investment Guidelines and Allocation Policy for presenting investment opportunities to entities it and its subsidiaries advise, including Millrose. We cannot provide any certainty about how many (if any) Other Customers we may be able to attract and take on as customers. Even if our Manager does find suitable Other Customers, such opportunities will be subject to the Allocation Policy. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement” and “Part I, Item 1A. Risk Factors—Risks Related to our Management Structure” for more information about Kennedy Lewis’s allocation policies and the related risks. 31 Table of Contents The Benefits of Millrose’s Recycled Capital HOPP’R Historically, Land Banking was done for long-lived and riskier collateral, and Land Banking structures were often utilized to offload risks associated with discrete assets onto a capital provider. These historical risk mitigation objectives of traditional Land Banking customers are inconsistent with the Recycled Capital HOPP’R that we aim to provide to at least certain of our customers, including Lennar. We believe Millrose’s business model suits the needs of, and provides valuable benefits to, sophisticated home builders, such as Lennar, who can withstand the responsibilities and risk exposures allocated to them under the Operating Principles. As such, the Operating Principles as reflected in the current Lennar Agreements require Lennar to take on significant responsibility in order to take advantage of the Recycled Capital HOPP’R. In return, Millrose expects to provide Lennar with a perpetual and tailored Recycled Capital HOPP’R that will persevere through both advantageous and disadvantageous market conditions. We believe the benefits that Millrose will provide to Lennar beyond what traditional Land Banking providers offer will enable Lennar to enjoy significantly greater certainty, predictability and reassurance about the stability and sustainability of its land light strategy—benefits that we believe far outweigh the responsibilities described above. Currently, our largest customer is Lennar. Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, but there is no guarantee that Millrose will continue to be successful in negotiating agreements with such customers and there is no guarantee that Millrose will be able to secure additional business arrangements with any home builders outside of Lennar in any given timeframe. Pursuant to the structures in place and the terms set forth in the Lennar Agreements, we believe Millrose’s contemplated business model should allow Lennar to realize its desire of enhancing return on equity and accelerating its planned ongoing transformation into an asset-light, high cash flow home building manufacturer. As set forth in the below illustrative diagram, we expect that the Recycled Capital HOPP’R should allow Lennar to systematically move land into an off balance sheet vehicle that is option driven, which can result in Homesites being available on a “just in time” basis, no different than when Lennar purchases other assets (e.g., materials, lumber and refrigerators) from critical suppliers as the cadence of home production dictates. While there are many benefits to Millrose over traditional Land Banking, one key differentiator, as discussed above, lies in the Recycled Capital HOPP’R: the intended permanence of Millrose financing afforded by the terms of the Lennar Agreements is expected to provide Lennar with access to a lower cost of capital on an ongoing basis and ensure that Lennar’s business operations remain uninterrupted. We believe this dependability should add significant value to Lennar in terms of providing more certainty as to where capital will come from and the extent to which it will remain available even in times of market stress. Highly Synergistic Business to Support Home Building The following descriptions summarize the synergistic arrangements we have with Lennar. These are the main steps contemplated in the Lennar Agreements between Millrose Holdings and Lennar: • Acquisition of Transferred Assets, Supplemental Transferred Assets and Future Property Assets 32 Table of Contents Millrose Holdings, through the Property LLCs, holds all of the Transferred Assets and the Supplemental Transferred Assets. Although there can be no guarantees, Millrose expects Millrose Holdings will make new land acquisitions of Future Property Assets for Lennar in accordance with the terms of the Master Program Agreement. Pursuant to the Master Program Agreement, in the event Lennar desires to enter into new transactions with Millrose Holdings, Lennar will be obligated to identify and evaluate suitable Future Property Assets for Millrose Holdings to purchase in connection with Millrose Holdings’ ongoing relationship with Lennar. With respect to any potential Future Property Assets that Millrose Holdings will acquire pursuant to the Lennar Agreements, Lennar will perform the acquisition analyses, diligence and vetting of potential Future Property Assets against the Program Criteria set forth in the Master Program Agreement on behalf of Millrose Holdings and once our Manager provides its approval after it performs the Manager Diligence Obligations on any Future Property Asset, Millrose Holdings (directly or through one of the Property LLCs) is obligated to acquire the Future Property Assets. As part of the Manager Diligence Obligations, the Manager employs its current underwriting team to conduct a thorough independent diligence assessment of each proposed transaction, ensuring adherence to the Investment Guidelines and assessing the credibility of the home builder’s financial projections. Kennedy Lewis’ underwriting team consists of more than 30 diligence professionals proficient in homebuilding, land acquisition, and financial analysis. They leverage third-party market data and internal proprietary datasets to formulate an autonomous evaluation of projected home selling prices, sales pace, and profit margins for each community. In general, the Manager’s due diligence includes an appropriate legal evaluation that ensures the land has received all necessary entitlement and environmental approvals. However, in accordance with the Lennar Agreements, Millrose has a put back right under certain circumstances that allows it to sell a property back to Lennar for a price equal to Millrose’s total capital investment in such property. This right is triggered in the event that, after acquisition of a Future Property Asset, there is a material misrepresentation regarding title, environmental and/or permits/approvals, such that the property cannot be developed and sold generally in the manner contemplated. In such circumstances, Millrose may exercise the put back right by notifying Lennar of the issue and misrepresentation, and Lennar will be obligated to purchase such property from Millrose within a reasonable time following Millrose’s exercise of its put back right. In light of Millrose’s put back right, our Manager does not believe that there is a need to conduct the same extensive legal analysis for proposed transactions with Lennar that it would for customers that have not given Millrose a similar put back right. As such, for any home builder and developer counterparties that do not agree to such put back right, the Manager will conduct an extensive due diligence process, including an appropriate legal analysis. All Transferred Assets and Supplemental Transferred Assets are pooled in accordance with the applicable Multiparty Cross Agreements. The Transferred Assets and the Supplemental Transferred Assets are grouped into 30 pools consisting of an average of 29 properties each. Future Property Assets will also be pooled in accordance with additional Multiparty Cross Agreements (or added to existing Multiparty Cross Agreements), provided that the aggregate sum of all Option Deposits Lennar has made, or is obligated to make with respect to such new pool of Future Property Assets, shall not at any time exceed $50,000,000 with respect to pools of the Transferred Assets and $25,000,000 with respect to pools of Future Property Assets. Pools will be established with primary consideration given to diversity within pools across geographies, communities and home types. • Purchase Option of Lennar with respect to the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets Pursuant to the Lennar Agreements, Lennar has the right but not the obligation to purchase Homesites from the Transferred Assets and the Supplemental Transferred Assets and to purchase any Future Property Assets at predetermined respective Takedown Prices and on predetermined respective Takedown Schedules. In connection with the Spin-Off, Millrose Holdings (directly or through one or more Property LLCs) executed various Project Addenda, pursuant to which the Transferred Assets are subject to the Master Program Agreement and Master Option Agreement. Following the closing of the Supplemental Transferred Assets Transaction, Millrose 33 Table of Contents Holdings executed various Project Addenda pursuant to which the Supplemental Transferred Assets are subject to the Master Program Agreement and Master Option Agreement. Once any Future Property Asset has been purchased in accordance with the Master Program Agreement, Millrose Holdings (directly or through one or more Property LLCs) will execute additional Project Addenda with respect to the Future Property Assets. The Master Option Agreement, as supplemented by each Project Addendum with respect to the respective properties, sets forth the terms and provisions relating to Lennar’s Purchase Option, including terms relating to Lennar’s Option Deposits, Monthly Option Payments, Takedown Schedules and Takedown Prices associated with each property comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets, as applicable. Under the Master Program Agreement and Master Option Agreement, upon Lennar’s request, Millrose and Millrose Holdings (directly or through the applicable Property LLC) agree to reasonably amend any Project Addendum, including adjustments to the Takedown Schedule and Takedown Prices; provided, however, that Millrose and Millrose Holdings may withhold their consent to any proposed amendments which will have a material adverse effect on Millrose, Millrose Holdings or any Property LLC. Lennar’s Purchase Option is issued in consideration for the Option Deposits with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets. The Option Deposits consist of an Initial Deposit and, if Millrose chooses, an Additional Deposit. The Initial Deposit was paid upfront upon execution of the Master Program Agreement and Master Option Agreement with respect to the Transferred Assets, was paid upon execution of the applicable Project Addendum with respect to the Supplemental Transferred Assets and will be paid upon execution of the applicable Project Addendum with respect to any Future Property Assets. The value of the Initial Deposit (i) was based on 5% of the total value of the Transferred Assets including future purchases and Horizontal Development costs, (ii) was based on 5% of the total value of the Supplemental Transferred Assets and Horizontal Development costs, and (iii) will be 5% of the sum of the projected total land acquisition and Horizontal Development costs for any Future Property Assets, as the case may be. The Additional Deposit may be paid at a later time as (i) a call option exercise by Millrose Holdings in the event our Manager, in its reasonable judgment, determines that Millrose Holdings requires such additional capital to fund its ongoing business operations in the ordinary course and/or (ii) a termination fee in the event Lennar terminates or forfeits its Purchase Option with respect to any properties. Regardless of whether the Additional Deposit is paid as a call option exercise, a termination fee or a combination of both, the value of the Additional Deposit will be cumulative and be up to 5% of the Takedown Price of the Homesites on a Property that are still subject to the Purchase Options that Lennar has outstanding. See “—Millrose’s Operational Agreements” for more information about the Option Deposits. Separately, Millrose Holdings receives Monthly Option Payments equal to an 8.5% (per annum) fixed rate per annum of its total outstanding capital investment in land acquisition and Horizontal Development funding with respect to the Transferred Assets and the Supplemental Transferred Assets, calculated on a daily basis, and at a floating rate between 7.0% to 10.0%, as calculated in the manner set forth in the Master Option Agreement and described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Option Agreement” that will once calculated for any Proposed Project, remain fixed for the duration of such Proposed Project with respect to any Future Property Assets, similar to a commercial bank receiving interest on its outstanding loan balances. These Monthly Option Payments are designed to provide Millrose with a recurring cash fixed income revenue base, supporting the goal of ensuring predictable cash distributions to stockholders. In certain circumstances, Lennar may request “pause periods” as contemplated in the Lennar Agreements, pursuant to which Lennar may lower its Monthly Option Payment fixed rate per annum as follows: (i) two pause periods for a period of up to six months for each pause period (during which time all takedowns and Work construction deadlines for all properties held for Lennar pursuant to the Lennar Agreements will also be extended), (ii) Lennar and Millrose may mutually agree to designate two additional pause periods of up to six months each for a total of up to two years, and (iii) pursuant to Lennar’s Pause Period Designation Right, Lennar will have the right to unilaterally decide to designate a Pause Period at any time in its sole discretion. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Option Agreement” for more information and specific details about the calculation of the Monthly Option Payments and the terms of the “pause” feature. 34 Table of Contents • Horizontal Development and Home Construction on the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets The Transferred Assets and the Supplemental Transferred Assets are, and any Future Property Assets will also become, subject to the Master Construction Agreement, under which Lennar is obligated to undertake Horizontal Development as part of its Work. Pursuant to the Lennar Agreements, Millrose, through Millrose Holdings and the Property LLCs, own the Transferred Assets and the Supplemental Transferred Assets, and will own any Future Property Assets, while Lennar performs its Work, and then (assuming Lennar’s exercise of its Purchase Options) the finished Homesites will be purchased by Lennar. Under the Master Option Agreement, Lennar has the option, but not the obligation, to undertake home construction on the Transferred Assets, the Supplemental Transferred Assets and the Future Property Assets. Millrose Holdings intends to use a portion of the payments received by Millrose Holdings pursuant to the Lennar Agreements to finance Lennar’s Work on the Transferred Assets and the Supplemental Transferred Assets over time, up to predetermined budgets for each Homesite project. Millrose Holdings may also use any capital secured through third-party financing to fund such construction payments. During a “pause period,” no construction payments will be due from Millrose Holdings to Lennar. Lennar oversees and executes the Work and provides completion and cost guarantees in favor of Millrose Holdings to complete the Work. Millrose, through Millrose Holdings (or any Property LLCs), is solely responsible for financing the Work up to the predetermined budgets for each property as set forth in the relevant Project Addendum. If Lennar undertakes home construction on the Homesites, then the cost of all home construction will be borne by Lennar and not Millrose or Millrose Holdings (or any of the Property LLCs). Lennar is responsible for all Work and any home construction on the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets acquired pursuant to the terms of the Lennar Agreements and for all insurance to cover any issues relating to the Work and the construction of the homes. Neither Millrose nor any of its subsidiaries will be responsible for maintaining any insurance with respect to the Homesites or anything constructed on the Homesites, except for general liability insurance as described herein under “Part I, Item 2. Properties—Operating Data on Real Estate Portfolio—Insurance.” • Exercise of the Option to Purchase the Finished Homesites Once the land is developed and Homesites are finished, Lennar is expected to purchase these improved Homesites, or cause Millrose Holdings or any Property LLCs to transfer the Homesites directly to home buyers once home construction has been completed (in which case, Lennar will indemnify Millrose for any issues relating to such direct delivery to home buyers pursuant to the Lennar Agreements). As and when Homesites are purchased by Lennar (or transferred directly to home buyers, at Lennar’s request), Millrose Holdings will collect all pre-negotiated costs for land acquisition and Horizontal Development in the form of take-down payments as consideration for the purchase of finished Homesites. The Takedown Price associated with each property will be the sum of the acquisition price of the property that Millrose Holdings (or its subsidiaries) paid and the predetermined budget that Millrose Holdings would finance in connection with the Horizontal Development of the property. In the event Lennar terminates, forfeits or otherwise fails to exercise its Purchase Options, then in addition to paying any portion of the Additional Deposit (that is still unpaid) as a termination fee, Lennar will be subject to the cross-termination provisions of the Multiparty Cross Agreements. Pursuant to such provisions, in circumstances where Millrose Holdings chooses to exercise its cross-termination right, Lennar will also forfeit its Purchase Option with respect to any properties pooled with the property for which Lennar did not exercise its Purchase Option. In the event Lennar does not exercise its Purchase Option and instead agrees, at Millrose Holdings’ request, to complete home construction on the forfeited property for Millrose Holdings, then the cross-termination provisions will not apply with respect to such property, in accordance with the Lennar Agreements. The following diagram illustrates the key steps in the HOPP’R process with regard to the Transferred Assets and the Supplemental Transferred Assets and to any Future Property Assets pursuant to the Lennar Agreements. As shown below, Millrose Holdings and its Property LLCs provides the HOPP’R to Lennar with regard to the Transferred Assets and the Supplemental Transferred Assets and any such Future Property Assets. 35 Table of Contents Land Purchase Horizontal Development Homesite Acquisition •  Millrose Holdings, through its subsidiaries, holds title to the Transferred Assets and the Supplemental Transferred Assets and will purchase and hold title to any Future Property Assets acquired pursuant to the Lennar Agreements. Lennar will perform the Lennar Services on each potential Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements. Subject to the Manager Diligence Obligations, Millrose Holdings’ future purchases will be either directly with the landowner or from Lennar. •  At each new Future Property Asset closing, Millrose Holdings will execute a Project Addendum with Lennar to develop the Future Property Asset into finished Homesites pursuant to the Master Construction Agreement. The Transferred Assets and the Supplemental Transferred Assets are already subject to the Master Construction Agreement. •  Millrose Holdings grants Lennar Purchase Options to acquire all of the finished Homesites comprising the Future Property Assets at set prices and schedules set forth in the Project Addenda, which supplement the Master Option Agreement. Such Purchase Options require Lennar to pay Millrose Holdings the Option Deposit, representing Lennar’s commitment to the project. The Transferred Assets and the Supplemental Transferred Assets are already subject to the Master Option Agreement. •  The Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets will be pooled pursuant to one or more Multiparty Cross Agreements. •  Lennar undertakes and completes all Work on each Homesite comprising the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets pursuant to the Master Construction Agreement and related Project Addenda. •  Millrose Holdings pays for the costs of the Horizontal Development as set forth in the Project Addenda. •  Lennar is responsible for any cost overruns in excess of the maximum development cost agreed at closing. Lennar is contractually obligated to complete Horizontal Development of land into finished Homesites. •  At its election, Lennar may commence or complete home construction on the Homesites prior to purchase. Millrose Holdings will not be responsible for financing any portion of the home construction on the Homesites. Millrose Holdings also does not have the right to force Lennar to undertake or complete home construction on any Homesite. •  For as long as Lennar maintains its Purchase Options with respect to any Homesites, it will be responsible for maintaining insurance coverage with respect to all Work and home construction on the Homesites. •  Lennar exercises its Purchase Option to acquire finished Homesites at the prices and timing detailed in the Master Option Agreement and related Project Addenda. •  At Lennar’s request, Millrose Holdings may deliver the Homesites to home buyers directly and will be indemnified by Lennar. •  Failure to acquire Homesites as agreed results in (1) forfeiture of the Initial Deposit portion of the Option Deposit, (2) loss of the right to acquire future Homesites, (3) payment by Lennar of the Additional Deposit portion of the Option Deposit (unless already paid to Millrose Holdings in connection with Millrose Holdings’ call option exercise), (4) Lennar being required to complete Work on the Homesites even if not selling homes and (5) loss of the right to buy other Homesites in the pool. •  Terminations of any Purchase Option with respect to any property may impact the entire pool in which the property sits if Millrose Holdings exercises its cross-termination rights, subject to the fee building exception. 36 Table of Contents The following diagram illustrates the life cycle of our finance model with respect to the Transferred Assets and the Supplemental Transferred Assets and to any Future Property Assets to be purchased by Millrose Holdings or a future Millrose subsidiary at Lennar’s request pursuant to the Master Program Agreement (except, with respect to the Transferred Assets, the initial land purchase descriptions do not apply as the Transferred Assets were transferred to Millrose Holdings and are held by the Property LLCs in connection with the Spin-Off): Illustrative Cash Flows • Option Deposit and Monthly Option Payments. Lennar pays Millrose Holdings the Initial Deposit portion of the Option Deposit as consideration for the grant of the Purchase Option, with the Additional Deposit portion of the Option Deposit to be paid later pursuant to the terms of the Master Option Agreement. Additionally, on an ongoing basis, Lennar pays Millrose Holdings a Monthly Option Payment, to maintain the Purchase Option. • Purchase by Millrose Holdings. Millrose Holdings pays the acquisition price for the Future Property Asset. • Development. Millrose Holdings funds the Horizontal Development of the land, up to the predetermined maximum budgets set forth in the respective Project Addenda, and Lennar uses such funds for completing the Horizontal Development. Lennar can complete home construction on the Homesites as well, at its option. • Purchase by Builder. Lennar purchases the improved Homesite from Millrose Holdings at the Takedown Price. In addition to the Option Deposits and the Monthly Option Payments, Millrose Holdings receives the Takedown Price paid by Lennar when Lennar exercises its Purchase Option to acquire Homesites from Millrose Holdings. In the event of any default or termination, Millrose Holdings has the ability to sell to a third-party 37 Table of Contents buyer the Homesites for which Lennar no longer has a purchase option. Pursuant to the Multiparty Cross Agreements that form a part of the Master Program Agreement, if Lennar allows its option to expire, Lennar forfeits the Option Deposits for the entire pool with regard to one of the pooled properties, then Millrose Holdings has the right, but not the obligation, to terminate the option on the other pooled assets. This helps protect Millrose Holdings against Lennar decisions not to purchase particular properties that have declined in value by enabling Millrose Holdings to sell to third parties, free of Lennar’s Purchase Options, other properties in the pool that may have increased in value. The price for which we can sell properties to third parties or sell homes we build may be significantly less than the amounts of our investments. In the event Millrose Holdings requests Lennar to complete home construction on any Homesite with respect to which Lennar has forfeited or terminated its Purchase Option and Lennar agrees, then the cross-termination provisions of the Multiparty Cross Agreements will not be applicable with respect to such Homesite. Limitations with Respect to Our Arrangements with Lennar Notwithstanding any of the above, there can be no assurance of how much Lennar will utilize the HOPP’R (if any), or on what timelines. While the Lennar Agreements do not have an expiration date, Lennar is under no obligation to commit to any future transactions with Millrose Holdings or give Millrose Holdings any new business at all (including any referrals of Lennar Related Ventures) under the Lennar Agreements. The Lennar Agreements provide Lennar with a Capital Priority Right and contemplate an ongoing business relationship between Millrose and Lennar, whereby Millrose would provide the Recycled Capital HOPP’R to Lennar for any Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements, but the Lennar Agreements do not include any exclusivity, rights of first refusal or first look or other priority rights for us with respect to any future business opportunities. This means that Lennar can decide not to offer us any additional business (beyond the Transferred Assets and the Supplemental Transferred Assets) for any reason at all, including, but not limited to, using traditional land banks or establishing another entity that will operate a HOPP’R, or if the business terms of the Lennar Agreements (individually or in the aggregate) are not as competitive as others in the market. Additionally, Lennar’s Land Banking arrangements with other providers could limit how many business opportunities we will be able to receive from Lennar with respect to Future Property Assets on a going-forward basis. Because Lennar’s subsidiary (or any future owner of the HOPP’R Rights) may license the HOPP’R Rights to other land banks and other external managers that manage land banks, our business could suffer, as we might no longer be the only publicly traded entity that will engage in large-scale recycled capital financing of land acquisition and Horizontal Development using the HOPP’R. In the future, other companies may develop their own versions of the HOPP’R, there can be no assurance that Millrose’s HOPP’R will be able to provide the same features that competitor companies providing the HOPP’R may have and at the same prices that competitor companies providing the HOPP’R may be able to offer. In turn, there can be no certainty as to whether our customers will remain with us if our future competitors that also provide the HOPP’R offer better services and/or better prices than we can. Furthermore, the Lennar Agreements require that Lennar Related Ventures and Other Customers may not pay a lower monthly option payment rate than the rate paid by Lennar unless Lennar is offered the same lower rate on a go-forward basis. Any change in the Applicable Rate would apply to all Purchase Options for Future Property Assets. While Millrose’s largest customer is Lennar, Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, but there is no guarantee that Millrose will continue to be successful in negotiating agreements with such additional customers and there is no guarantee that Millrose will be able to secure additional business arrangements with any home builders outside of Lennar in any given timeframe. Millrose expects that the arrangements with these other potential customers will be similar to its arrangements with Lennar (as described above), but there is no certainty that Millrose will be able to successfully negotiate for substantially all of the same terms it has in the Lennar Agreements, including with respect to pooling. 38 Table of Contents Limitations to the Growth of the HOPP’R As discussed under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement” Lennar’s Applicable Rate Adjustment Right allows Lennar to adjust its Applicable Rate for Proposed Projects initiated during the 180 day period after a HOPP’R or other arrangement is entered into for any rate lower than Lennar’s agreed upon between Millrose and any Lennar Related Ventures or Other Customers. This would also apply to any individually-negotiated HOPP’R agreements we enter into with Lennar Related Ventures or Other Customers for alternate, possibly non-self-financing recycled capital forms of the HOPP’R that do not require adherence to our Operating Principles. If Lennar pays a lower fee rate on Monthly Option Payments with respect to new deals going forward, our revenues will be negatively impacted, and we may incur significant costs as a result of the change. As a consequence, we cannot guarantee that we will be able to identify or attract any Other Customers who will want to utilize the HOPP’R. Many of the competitors in this more “traditional” Land Banking space have significantly larger operations and resources, a much longer operating history and credibility and developed reputation, and an established market capitalization. We are a brand-new company with no prior operating history or reputation and, even though KL manages our operations and has extensive experience in managing Land Banking entities, there can be no certainty as to how much credibility the market will ascribe to Millrose simply because KL is the Manager. Lennar, as the original parent company of Millrose and the initial contributor of the Business Assets to Millrose, has certain Founder’s Rights. As such, Lennar, and in some cases the Class B common stock holders, may influence certain corporate matters, which may deter potential Other Customers from doing business with Millrose. Other Customers will not have access to the same rights as Lennar and additionally, Other Customers may be concerned about the risk that Lennar and/or the holders of Class B common stock (the majority of which is held by the Miller Family) will have certain controls that would adversely impact their business with Millrose (especially if the Other Customers are competitors of Lennar). See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” Millrose’s Customers Other than Lennar Lennar is currently our largest customer, and we have no certainty as to when we may engage with additional customers to provide them with the HOPP’R. While we are confident that we will maintain successful operations in the first few years following the Spin-Off as we provide the Recycled Capital HOPP’R to Lennar with respect to the Transferred Assets and the Supplemental Transferred Assets, there is uncertainty as to the future of our business following the complete turnover of the Transferred Assets and the Supplemental Transferred Assets, as Lennar is under no obligation to provide us with any new transactions and opportunities with respect to any Future Property Assets. This means that, unless we continue to receive substantial new transaction opportunities from Lennar under the Lennar Agreements or we continue to contract with Lennar Related Ventures or Other Customers, we will not have many active customers utilizing the HOPP’R following the complete turnover of the Transferred Assets and the Supplemental Transferred Assets. While Millrose’s largest customer currently is Lennar, we have engaged and continue to engage in discussions with other home builders who are interested in becoming new customers. However, there is no guarantee that we will continue to be successful in negotiating agreements with additional customers and there is no guarantee that Millrose will be able to secure additional business arrangements with other home builders outside of Lennar in any given timeframe. Millrose expects that the arrangements with these other potential new customers will be similar to its arrangements with Lennar (as described above), but there is no certainty that Millrose will be able to successfully negotiate for substantially all of the same terms it has in the Lennar Agreements, including with respect to pooling. We continue to seek to identify, evaluate and enter into HOPP’R agreements with additional new customers to expand our operations to customers beyond Lennar as part of its efforts to expand and diversify our customer base and Real Estate Portfolio and scale our business growth. Millrose will rely on Lennar to refer any Lennar 39 Table of Contents Related Ventures to Millrose as potential customers, which Lennar may elect to do at its option. It is KL’s responsibility, as our Manager, under the Management Agreement to find, identify and evaluate any potential Other Customers. To drive diversification and growth of Millrose’s business and maximize the potential of its business, we do not intend to limit the HOPP’R solely to the Recycled Capital HOPP’R. Although the intended permanency of Millrose’s HOPP’R is a key distinguishing feature of Millrose’s business, the HOPP’R also has the flexibility to evolve and be further refined with different features to fit each customer’s needs. Regardless of the combination of features any customer may desire to negotiate with Millrose, the HOPP’R is designed to provide at its core a sophisticated, streamlined and professional approach to land acquisition and Horizontal Development financing for home builders and developers in the residential real estate industry that was previously exclusively for the benefit of Lennar. We believe expanding our business beyond just the Recycled Capital HOPP’R and building a much larger potential customer base that could encompass a larger population of residential home builders and real estate developers, no matter their capital needs, risk profile or business model, will also help enable us to grow our business and provide us with more sources of revenue and income. Due to the individualized negotiation process, we cannot predict the nature or terms of any of these future agreements. Such potential arrangements may reflect some but not all, or none of the Operating Principles. The nature of any arrangements we may have with any such customers will depend on the allocation of certain responsibilities and risk exposures between us and the home builders or real estate developers. We expect that, in the absence of any Operating Principles reflected in these HOPP’R agreements, the HOPP’R we provide will be strategically tailored to the relative risk profile, creditworthiness (as determined by our Manager) and business models of the potential customer, with the aim of protecting Millrose from bearing too much risk, and we expect the arrangements we negotiate will generally reflect the latest market conditions and follow then-current standard industry practices. In many circumstances, the HOPP’R we provide to such Lennar Related Ventures and Other Customers may not be the Recycled Capital HOPP’R, and the arrangements around providing the HOPP’R in these cases may rather share the characteristics and terms of more traditional Land Banking arrangements that are commonly used in the market today (i.e., there will likely not be any assurance to such home builders that Millrose will be able to provide them with available capital during periods of market downturn or continued periods of depressed market conditions, particularly in view of Lennar’s Capital Priority Right). Our Board oversees our Manager’s management of our business operations, including the provision of the HOPP’R to our customers and performance of all obligations under the Lennar Agreements and any future HOPP’R agreements, with the objective of ensuring that our Manager’s business decisions and the agreements that it enters into on behalf of Millrose (or Millrose’s Other Subsidiaries) are all in the best interests of Millrose and its stockholders. In the event that financing (including debt or equity financing) is required for any new or existing arrangements to provide the HOPP’R to new customers, such decisions will be subject to the approval of our Board. Any issuances of debt or equity to finance these relationships could result in impacts to our business and to our stockholders, including increasing our debt to equity ratios, dilution for our existing stockholders, and increasing risk of default of Other Customers. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business Model and Investment in a Newly Formed Entity” and “Part I, Item 1A. Risk Factors—Risks Related to our Common Stock.” Lennar may have a role in identifying potential Other Customers who may engage with us for the HOPP’R, but is not obligated to do so, and Lennar will have no role in negotiating any such HOPP’R agreements, or dictating or restricting our ability to provide any ongoing services related to the provision of the HOPP’R to such Other Customers. Millrose’s Operational Agreements See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar” of this Form 10-K for more information on the operational agreements and other arrangements between Lennar and Millrose and Millrose Holdings. 40 Table of Contents Millrose’s Revenue and Capital Sources Traditionally, income associated with property REITs is generated through rental payments received from tenants occupying properties within their portfolio. The market segments in which they operate span a diverse array of traditional real estate sectors such as residential, commercial, retail, and industrial. These rental revenues form the cornerstone of a REIT’s income stream, often providing stability and predictability. At least initially following the Spin-Off, Millrose, through Millrose Holdings, expects to utilize a model that is similar to this consistent nature of rent payments for certain other REITs. However, rather than receive rents for possession of the underlying real estate, Millrose Holdings expects to receive its payments on a consistent basis in the form of Monthly Option Payments. The Monthly Option Payments will be equal to a fixed rate per annum of its total outstanding capital investment in land acquisition and Horizontal Development funding, calculated on a daily basis. The payments received by Millrose Holdings, the Property LLCs and Other Subsidiaries from the payment of Option Deposits and from the exercise of Purchase Options will be available to the Millrose Subsidiaries to finance acquisitions of additional Future Property Assets that can be improved and developed through the HOPP’R and purchased as finished Homesites by our customers on a “just in time” basis, while a portion may be used to repay the principal on the Promissory Note. Millrose Holdings, the Property LLCs and Other Subsidiaries will distribute to Millrose (i) net earnings generated from the Monthly Option Payments after payments for taxes and expenses (including the Management Fee) and (ii) monthly interest payments on the Promissory Note (which is currently approximately $358 million annually based on a 7.5% interest rate), and such amounts will then be distributed by Millrose as dividends to Millrose’s stockholders, consistent with or in excess of the amount that would satisfy applicable REIT Requirements. We believe these expected regularly scheduled payments should provide a predictable and stable source of income and stockholder distributions, assuming the expected performance by Lennar of its obligations under the Lennar Agreements. There can be no guarantee as to what extent Millrose will be able to engage any Lennar Related Ventures or Other Customers and expand its customer base and business operations, and there is the possibility that Millrose’s business will remain largely limited to its relationship with Lennar following the Spin-Off. Our ability to finance relationships with customers other than Lennar may be limited by Lennar’s Capital Priority Right. In the future, to the extent Millrose (directly or through its subsidiaries) enters into HOPP’R agreements with any Lennar Related Ventures or Other Customers, Millrose’s revenues will also be expected to include income from any such future business relationships with such Lennar Related Ventures and Other Customers. We have a revolving credit facility under the Credit Agreement and may seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers, but there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit In the future, Millrose may also seek additional third-party financing to satisfy any additional capital needs or raise capital through equity and debt issuances into the market. For more information, see the sections entitled “Part I, Item 1A. Risk Factors—Risks Related to Our Business Model and Investment in a Newly Formed Entity,” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off.” For more information about our initial sources of revenues and our other potential sources of liquidity and capital, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations Following the Spin-Off.” Millrose’s Operating Guidelines Allocation Policy Other Customers brought to Millrose by KL, as our Manager, will be subject to the Allocation Policy (which is described further under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement” and attached to the Management Agreement). 41 Table of Contents In any event, our Manager strives to ensure that Millrose and Millrose Holdings at all times maintain ample cash reserves for liquidity purposes, allowing for swift capital deployment or maneuvering in response to market fluctuations in furtherance of improving Millrose’s Real Estate Portfolio allocation by taking advantage of strategic market opportunities. Subject to any contractual obligations that may impact our Manager’s ability to do so, our Manager also aims to maintain continual monitoring and, to the extent feasible, adjustments of Millrose’s Real Estate Portfolio (in the context of Millrose providing the HOPP’R to Other Customers) with the goal of ensuring general alignment with Millrose’s business model, investment objectives and market conditions, and facilitating long-term growth and resilience in the face of changing economic landscapes. Investment Guidelines Our Manager intends to make acquisitions of Future Property Assets (although success is not guaranteed) under the following guidelines and conditions, which are set forth in the Management Agreement (in addition to any additional guidelines set forth in any HOPP’R agreements that are specific to each customer, such as the Program Criteria in the Lennar Agreements): 1. Maintain geographic diversity so that no more than 40% of the total value of the Real Estate Portfolio are concentrated in a single state. 2. Limit Future Property Assets with discretionary entitlements that create unnecessary risk to the projected Takedown Schedules. 3. Ensure execution of construction agreement allocating responsibility to counterparty for completion of all sitework and guarantee of costs in excess of budget. 4. Ensure execution of an option agreement on or prior to closing with a defined Takedown Schedule. 5. Invest in Future Property Assets with a primary planned use as Homesites for single-family detached and/or attached homes. 6. Invest in Future Property Assets that are free from liens and encumbrances or material transfer restrictions and without pending moratoriums on building or development on the property; provided, however, that the real estate assets may be subject to Community Development Districts (CDDs), Mello-Roos Community Facilities Districts (CFDs) (California), Municipal Utility Development Districts (MUDDs) (Texas), or other special-purpose districts or special taxing districts used to finance public improvements and infrastructure. 7. Invest in Future Property Assets for which there is a satisfactory environmental site assessment dated no earlier than 180 days prior to the date of acquisition of such property. 8. Invest in Future Property Assets that allow builder rights to such assets to be assignable. 9. No investment will be made that would cause Millrose to fail to qualify as a REIT. 10. No investment will be made that would cause Millrose to register as an investment company under the Investment Company Act. 11. Subject to the terms of the Allocation Policy and the requirements for maintaining Millrose’s qualification as a REIT, the Manager may invest as it deems appropriate any proceeds of future offering by Millrose and cash from operations and capital transactions in excess of the amount required for the purchase of Future Property Assets pursuant to these Investment Guidelines may be invested as the Manager deems appropriate, subject to the requirements for maintaining Millrose’s qualification as a REIT. The Competitive Landscape The Land Banking market is characterized by a competitive landscape shaped by various entities ranging from real estate developers to alternative investment asset managers. Key players such as Kennedy Lewis, Angelo, Gordon & Co. L.P. (now a subsidiary of TPG Inc.), DW Partners, LP and Brookfield Properties are 42 Table of Contents some of the most significant competitors in the market, each offering unique structures tailored to meet the expanding needs of home builders and land developers. As competition intensifies, innovative approaches and strategic acquisitions become essential for companies to maintain their competitive edge in this dynamic market environment. Millrose intends to operate in the residential housing finance space, which is generally occupied by residential mortgage REITs and other finance companies deriving revenue from interest income on financing mortgage or other finance arrangements. However, we believe Millrose’s intended focus specifically on the residential marketplaces it in a less competitive niche of the market, competing with a select number of private investment funds and asset managers providing Land Banking to residential home builders. The trending shift of home builders towards a land light strategy and “just in time” operating model requires having access to a sophisticated perpetual financing partner to alleviate balance sheet demands and unlock enterprise value through more efficient capital investment. However, high barriers to entry exist due to the operational and administrative requirements of the land light strategy. Although there are traditional Land Banking providers that focus on the residential home building finance space, as of the date of this Form 10-K, Millrose is expected to emerge from the Spin-Off as the only publicly traded entity that will engage in large-scale recycled capital financing of land acquisition and Horizontal Development using the HOPP’R. Land Banking (including residential Land Banking) is a space normally limited to private equity funds. We believe that Millrose’s bifurcated business model that is designed to strategically manage risk and maximize returns and Millrose’s current arrangements with Lennar through the Lennar Agreements, together with the other factors described herein, will help to maximize Millrose’s ability to execute strategic plans best suited to maximize the value of the HOPP’R and provide returns to its investors. Human Capital Management The KL Management Team The Manager is Kennedy Lewis Land and Residential Advisors LLC, an affiliate and wholly-owned subsidiary of Kennedy Lewis. Kennedy Lewis is an institutional alternative investment firm with assets under management in excess of $25 billion, including Millrose, as of March 25, 2025. Assets under management is based on the most recent documented/approved calculations for clients of investment managers affiliated with Kennedy Lewis and the assets under management of private funds includes funded and unfunded commitments. It was founded in 2017 and is headquartered in New York City with additional offices in Miami, Florida and Geneva, Switzerland. Kennedy Lewis is led by David Kennedy Chene, as the Co-Founder, Co-Portfolio Manager and Co-Managing Partner, Darren Lewis Richman, as the Co-Founder, Co-Portfolio Manager and Co-Managing Partner, and Doug Logigian, as the Co-Managing Partner and President. These principals, together with the broader Kennedy Lewis team, have extensive experience sourcing, underwriting, capitalizing and financing land and home builder finance investments. We believe the capabilities of KL, including its vertically integrated servicing and asset management support division, serve to mitigate risk and add value to Millrose’s investments. Kennedy Lewis’ in-house Land Banking servicer includes professionals with prior experience working at home builders, including Lennar, Hovnanian Enterprises, Inc., Beazer Homes USA Inc., Toll Brothers, Inc., and Woodbridge Builders Corp., as well as Land Banking platforms at DW Partners, LP and Blackstone Credit, the credit investment arm of The Blackstone Group. Led by David Valiaveedan, former Vice President of Finance and Treasurer at Hovnanian Enterprises, Inc., a national home builder, this dedicated team provides various value-add asset management services, including: • Asset monitoring: monitor pace of Horizontal Development and community sales; provide ongoing market and project risk assessment, including home sale pricing and pace of sales; regular site visits. • Servicing: disbursements of capital for Horizontal Development, sales of Homesites to home builders and collection of monthly option payments. 43 Table of Contents • Due diligence and transaction support for Kennedy Lewis’ investment team: gather due diligence documents, coordinate closing documents, compile third-party research for analysis, and populate standard templates that drive financial models. As experts in the Land Banking industry, KL has significant experience that we believe will help Millrose maximize value under its business structure and strategy. We believe our organizational structure, with KL as our external manager, and our business strategy and model, with the features described above, should allow Millrose (through Millrose Holdings) to capitalize on the value of the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets over the life cycle of these Horizontal Development projects. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager” for more information about KL as the Manager and our relationship with KL. Staffing We do not currently have any employees. Our day-to-day operations are managed by our Manager. Our Manager may hire additional professionals, based upon their needs. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager.” Millrose’s Organizational Structure An illustrative summary organizational chart of Millrose’s corporate structure, including state of incorporation or formation, and each entity’s relationships with Lennar and our Manager is below: 44 Table of Contents Compliance with Governmental Laws and Regulations, including those relating to Environmental Matters Because we operate as a REIT and own real estate properties, we are required to comply with various governmental laws and regulations, including those relating to environmental matters. Because we are a public company, we also must comply with the Exchange Act. Environmental Matters We have invested, and expect to continue to invest, in real property assets, which are subject to laws and regulations relating to the protection of the environment and human health and safety. Environmental laws and regulations, such as the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), as amended, and analogous state laws, generally impose liability, without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current owner or operator of a contaminated property, a former owner or operator of the property at the time of contamination, and those persons that disposed or arranged for the disposal of the hazardous substance at the property. Under CERCLA and comparable state statutes, persons deemed “responsible parties” are subject to strict liability that, in some circumstances, may be joint and several for the costs of removing or remediating previously disposed wastes (including wastes disposed of or released by prior owners or operators) or property contamination (including groundwater contamination), for damages to natural resources and for the costs of certain health studies. It also is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. This liability could be substantial. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings. Environmental laws and regulations are under constant review for amendment or expansion, and some have been amended to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenant companies’ operations, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance. Any material expenditures, fines, or damages we must pay would reduce our ability to make distributions. Other Regulations State and federal laws in this area are constantly evolving, and we intend to monitor these laws and take commercially reasonable steps to protect ourselves from the impact of these laws, including where deemed necessary, obtaining environmental assessments of properties that we acquire; however, we will not obtain an independent third-party environmental assessment for every property we acquire. In addition, any assessment we obtain may not reveal all environmental liabilities or whether a prior owner of a property created a material environmental condition not known to us. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution. Seasonality For a discussion of the seasonality of our business, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Millrose Following the Spin-Off—Seasonality.” 45 Table of Contents Item 1A. Risk Factors Our business involves substantial risks. Any of the risk factors described below or elsewhere in this Form 10-K could significantly and adversely affect our business prospects, financial condition and results of operations. The risks described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial may also adversely affect us. RISK FACTORS Risks Related to Our Business Model and Investment in a Newly Formed Entity We are a newly formed company with limited operating history, and you have a limited basis on which to evaluate our ability to achieve our business objectives or to even perform as a standalone and separate business. Millrose was incorporated as a Maryland corporation on March 19, 2024. Millrose Holdings, our wholly-owned subsidiary, was formed on March 13, 2024 as a limited liability company under the laws of the State of Delaware. As of the date of this Form 10-K, the majority of our business operations are comprised of the Transferred Assets, the Supplemental Transferred Assets and the Lennar Agreements. Because we have limited operating history, you have a limited basis upon which to evaluate our ability to achieve our business objectives and perform as a standalone and separate business. If we fail to achieve our business objectives, we will generate limited operating revenues which may not allow us to perform and grow as a standalone business. We have limited operating history as an independent public company, and the financial information provided herein is not necessarily representative of the results that we would have achieved as a separate, publicly traded company. Also, the Transferred Assets did not produce revenues during the periods to which the financial statements included in this Form 10-K relate. Accordingly, the financial information included in this Form 10-K does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly-traded company during the periods presented, or those that we will achieve in the future. As we have not historically been a publicly traded company, the financial information also does not reflect the additional costs required to operate as a publicly traded company and maintain compliance with all applicable laws and regulations to which publicly traded companies are subject. Additionally, in connection with the Spin-Off, we only received the Business Assets from Lennar, which does not include the carryover of any existing operations, personnel or other infrastructure. We will not benefit from administrative and support services from Lennar and will instead rely on the Manager pursuant to the terms of the Management Agreement. As such, our business, operations, facilities, personnel, infrastructure, systems and other resources are all newly formed and wholly separate from and not comparable to those of Lennar’s, except pursuant to the relationships described under the Master Program Agreement and Master Construction Agreement relating to the Lennar Services. Other factors which could materially and adversely impact our results may include, but are not limited to, the following: • We have incurred and will incur increased expenses as a newly formed, independent public company, which have been paid and will be paid for by our Manager as part of their Manager responsibilities (such expenses are expected to be covered by the Management Fee and will not be separately reimbursed by us to our Manager), except as described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” • Initially following the Spin-Off, primary business and source of revenues have been and will continue to be from Lennar pursuant to the Lennar Agreements. While Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, there is no guarantee that Millrose will continue to be successful in negotiating agreements with additional 46 Table of Contents customers and there is no guarantee that Millrose will be able to secure any business arrangements with any home builders outside of Lennar in any given timeframe. Millrose expects that the arrangements with these other potential customers will be similar to its arrangements with Lennar, but there is no certainty that Millrose will be able to successfully negotiate for substantially all of the same terms it has in the Lennar Agreements, including with respect to pooling. • The Credit Agreement provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion and we may also pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers, but there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit. • Lennar, as the original parent company of Millrose and the initial contributor of the Business Assets to Millrose, has certain Founder’s Rights, which are exclusive to Lennar, including the Management Succession Consent Right, the Effective Equity Price Protection Right, the Enforcement Rights, the Applicable Rate Adjustment Right, the Capital Priority Right, the Secured Financing Collateral Consent Right, and the Pause Period Designation Right, among others. As such, Lennar may have influence over certain corporate matters, which may deter potential investors from investing in Millrose and may deter potential Other Customers from doing business with Millrose, as Other Customers do not have access to the same rights as Lennar. Additionally, Lennar’s Capital Priority Right limits the amount of capital Millrose has available for transactions with Other Customers, which may make it difficult to provide the HOPP’R to Other Customers. For additional information regarding Lennar’s rights, see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement.” • While the Lennar Agreements do not have an expiration date, Lennar is under no obligation to commit to any future transactions with Millrose Holdings or give Millrose Holdings any new business at all (including any referrals of Lennar Related Ventures) under the Master Program Agreement. The Lennar Agreements provide Lennar with a Capital Priority Right and contemplate an ongoing business relationship between Millrose and Lennar, whereby Millrose would provide the Recycled Capital HOPP’R to Lennar for any Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements, but the Lennar Agreements do not include any exclusivity, rights of first refusal or first look or other priority rights for us with respect to any future business opportunities. This means that Lennar can decide not to offer us any additional business (beyond the Transferred Assets and the Supplemental Transferred Assets) for any reason at all, including, but not limited to, using traditional land banks or establishing another entity that operates a HOPP’R, or if the business terms of the Lennar Agreements (individually or in the aggregate) are not as competitive as others in the market. Additionally, Lennar’s Land Banking arrangements with other providers could limit how many business opportunities we will be able to receive from Lennar with respect to Future Property Assets on a going-forward basis. • Since we do not have access to any of Lennar’s internal capabilities and other resources (except for the Lennar Services), we must make investments to replicate or outsource from other providers certain facilities, systems, infrastructure and third-party consultants and experts (outside of our Manager). If the cost of these investments exceeds the Management Fee, our Manager may seek to renegotiate the Management Agreement. • Since we do not have any exclusivity terms with Lennar, Lennar’s personnel only have a contractual obligation to provide us with the Lennar Services, and they at all times remain as Lennar’s employees while carrying out these services under the Lennar Agreements. Lennar’s personnel may have competing responsibilities as they continue to perform similar services for Lennar (and potentially for Land Banking providers similar to Millrose), which could limit the time, resources and attention they have for us. 47 Table of Contents • Our cost structure, management, financing and business operations are significantly different from those of Lennar as a result of us operating as an independent public company. These costs generally are paid for by our Manager as part of their Manager responsibilities (such expenses are expected to be covered by the Management Fee and are not separately reimbursed by us to our Manager) including, but not limited to, legal, accounting, compliance and other costs associated with being a public company, and except as described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” • We are managed by KL, which may decide to execute on different business strategies and make business decisions inconsistent with those previously made by Lennar prior to the Spin-Off, which may lead to unsuccessful business endeavors and different financial performance results. • We have no history of operating a HOPP’R, and may not develop a successful business if we are not able to successfully become (and remain) Lennar’s preferred business partner for financing the acquisition and development of land or otherwise procure HOPP’R agreements outside of the Lennar Agreements. • We are unable to use Lennar’s economies of scope and scale in procuring various services (including for internal purposes) and in obtaining and maintaining business relationships, which could have a material adverse effect on our business, financial condition and results of operations. Other significant changes may occur in our cost structure, management, financing and business operations as a result of our new status as an independent company. The Supplemental Transferred Assets Transaction included properties outside of the geographies in which Lennar has historically operated, and property values in those geographies may be different from those in which Lennar has operated. The Homesites and prospective Homesites that Millrose acquired from Rausch in connection with the Supplemental Transferred Assets Transaction are located in a number of different geographies in the United States, a substantial number of which are in states in which Lennar has not historically operated. Lennar does not have expertise and experience in purchasing land assets, developing Homesites and selling finished Homesites to homebuyers in such states, and Lennar will need to rely on the personnel from Rausch that it acquired as part of the acquisition for their expertise in such geographies. The skills and expertise of Rausch’s personnel may not be commensurate as those of existing Lennar personnel, and as such, the Lennar Services (at least with respect to the Supplemental Transferred Assets and future properties acquired in these new geographies) may not meet all expectations based on Lennar’s historical practices and results. Additionally, the differences in geographies may also impact Lennar’s decision-making with respect to its Purchase Options exercises, which could be different from how they determine their Purchase Options exercises for the Transferred Assets and any Homesites in geographies in which Lennar has traditionally operated. All these differences could impact Millrose’s business, operations and financial condition in ways that are difficult to predict. Our initial business consists primarily of owning and selling the Transferred Assets and the Supplemental Transferred Assets in connection with providing the HOPP’R to Lennar. Therefore, we are subject to risks associated with having a portfolio that is highly concentrated by one business counterparty. Initially, our business operations have been mostly limited to providing the HOPP’R for the Transferred Assets and the Supplemental Transferred Assets to Lennar, who is currently our largest counterparty. Millrose (including Millrose Holdings) was created by Lennar for the primary purpose of providing the HOPP’R to Lennar and, in the future, also to potential Lennar Related Ventures and Other Customers. As a result, we initially have had limited other customers, business partnerships, ventures, projects or workflow, and we are not guaranteed to obtain any in the near-term. We intend, through future subsidiaries, to continue to diversify our 48 Table of Contents customer portfolio and extend the HOPP’R to Lennar Related Ventures and Other Customers in the United States, but there is no guarantee to what extent this will happen, or if we will be successful in attracting and retaining more new customers even if we are able to expand our business operations. Following the Spin-Off and after the Supplemental Transferred Assets Transaction, our Real Estate Portfolio is primarily limited to the Transferred Assets and the Supplemental Transferred Assets, which are concentrated across a limited number of U.S. states. As of December 31, 2024, a significant amount of the Transferred Assets and the Supplemental Transferred Assets taken together were concentrated in three states (California, Florida and Texas), with a substantial portion located in Florida and Texas. The geographic concentration of such land assets could cause us to be more susceptible to market risks and environmental risks, as discussed elsewhere in this “Risk Factors” section. Even as we attract new customers other than Lennar, the scope of our business operations will likely be limited to providing the HOPP’R (either the Recycled Capital HOPP’R or any tailored forms of the HOPP’R with individually negotiated features, which may not be the same features as the Recycled Capital HOPP’R) or similar operations. We entered into the Credit Agreement, which provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion, and may also seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers, but there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit. However, issuances of debt or equity required to finance any relationships to provide the HOPP’R to new customers could result in impacts to our business and to our stockholders, including increasing our debt to equity ratios, dilution for our existing stockholders (see “—Risks Related to Our Common Stock—Your voting power in Millrose may be further diluted if we issue more shares of our common stock in the future, including in connection with the acquisition of any Future Property Assets.”), and risk of default by our customers. Additionally, drawdowns on our revolving credit facility under the Credit Agreement are subject to repayment and interest, which may become costly to us in the event we are required to repay the borrowings under the facility and are not able to raise alternate financing with which to do so. Furthermore, there is no guarantee that such sources of additional capital will be obtained on acceptable terms or at all or will be sufficient to cover all of our business growth initiatives, and pursuant to the Lennar Agreements, Millrose may not enter into any third-party financing arrangements if such financing arrangement would cause the collective debt to equity ratio of Millrose and its affiliates to exceed 1:1, unless it obtains the prior approval of Lennar. This may limit our ability to provide the HOPP’R to any customers who may want us to finance their relationships with us through debt issuances. As discussed in this “Risk Factors” section, maintaining land assets is costly and exposes us to significant risks, and due to our lack of business diversification, we do not have the ability to hedge that risk through other operations. As we do not intend to diversify our business operations and only focus on growing the HOPP’R and similar operations, we may not be able to be sustainable as a business if the costs related to our risk exposures in maintaining land assets become more than what we can pay with the capital resources available to us. Additionally, if our relationship with Lennar were to deteriorate as a result of disputes regarding the management of the Transferred Assets and the Supplemental Transferred Assets, disputes under our business agreements, or for other reasons, we may not be able to enter into any new agreements to provide the HOPP’R to one or more other buyers on terms equivalent or comparable to those set forth in the Lennar Agreements, and the costs related to finding an alternate buyer for the properties may be significant and have a material impact on our business, financial condition or results of operations. There can be no assurance that we will not experience any defaults and/or terminations under the Lennar Agreements. Due to our highly concentrated portfolio with Lennar, any factors that adversely affect Lennar’s results of operations and capital resources may in turn have a significant adverse impact on our business, financial condition or results of operations, as discussed elsewhere in this “Risk Factors” section. 49 Table of Contents Our recycled capital business model is contingent on our customers electing to exercise their land purchase options. The continued sustainability of Millrose’s self-financing recycled capital business model, which is intended to generally provide Millrose with reliable, consistent and uninterrupted access to capital, is contingent in the first instance on Lennar and any Other Customers electing to exercise their land purchase options. Lennar is under no obligation to exercise its options, and we would have no ability to force Lennar to purchase Homesites if it decided not to exercise the options it has pursuant to the Lennar Agreements, which is possible in the event of a significant downturn in the market. Millrose can request (and Lennar cannot unreasonably deny such request) that Lennar build homes on behalf of Millrose on any Homesites for which it has forfeited or terminated its Purchase Options and Millrose may attempt to sell such completed Homesites to third parties. However, there is no guarantee we would be able to achieve such sales. Such construction and the subsequent resale to the third parties would require additional time and cost to Millrose, including hiring personnel and providing the capital to build the homes, that will be borne by us. The price for which we can sell homes to third parties may be significantly less than the amounts of our investments. Our agreements with Lennar involve conflicts of interest, and we might have received better terms from unaffiliated third parties than the terms we received in these agreements. We entered into the Lennar Agreements with Lennar to provide a framework for our relationship with Lennar, including the Founder’s Rights Agreement, Master Program Agreement, Master Option Agreement, Master Construction Agreement, Guaranty, various Multiparty Cross Agreements and Project Addenda, among others. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar” for a full list and summary of the Lennar Agreements. All of the Lennar Agreements, as well as the Management Agreement, have been prepared at the direction of Lennar, in consultation with Kennedy Lewis, which acted as Lennar’s strategic advisor with respect to the Spin-Off. These agreements were entered into in the context of the Spin-Off by Lennar on behalf of Millrose, as a wholly-owned subsidiary of Lennar, prior to the completion of the Spin-Off. Certain of the terms in the Lennar Agreements and the Founder’s Rights Agreement were the result of negotiations within Lennar in anticipation of, or in connection with, the Spin-Off, in which Lennar’s interests and Millrose’s interests may have differed or in which Millrose’s best interests were not considered. Certain of the rights granted to Lennar in the Founder’s Rights Agreement, which are exclusive to Lennar, may not align with the interests of Millrose’s other stockholders now that it is a publicly traded company. These rights may not reflect terms (and Bylaws provisions) that would have resulted from arm’s-length negotiations with one or more unaffiliated third parties. As a result, these rights may deter potential investors, which could depress the market price of our Class A common stock and in turn the value of our Class B common stock, and may deter potential Other Customers from doing business with Millrose, as Other Customers do not have access to certain rights that are exclusive to Lennar. Certain of the terms in the Management Agreement were the result of negotiations between Lennar and Kennedy Lewis, and there can be no assurance that Lennar negotiated the Management Agreement with Millrose’s best interests in mind. Accordingly, there may have been conflicts of interest in negotiating and finalizing these agreements. Because Millrose had no independent management or personnel prior to the Spin-Off, the preparation and finalization of all terms in any agreement Millrose or Millrose Holdings entered into have not been done at arm’s length, and Millrose (and the KL team that will be performing on Millrose’s and Millrose Holdings’ obligations under these agreements as our Manager) had not independently verified that the terms of such agreements are comparable to standard market terms. The terms of the agreements may be considered more favorable to Lennar than if Lennar had negotiated with a third-party land bank. Likewise, there can be no assurance that the terms of these agreements will be considered as favorable to Millrose or Millrose Holdings as would have resulted from arm’s-length negotiations with one or more unaffiliated third parties. Some of these agreements, including the Founder’s Rights Agreement, include rights exclusive to Lennar that Millrose is not able to grant to Other Customers, which may impact our negotiating leverage with potential Other Customers. Additionally, during the period in which the terms of those agreements were negotiated, we did not 50 Table of Contents have a board of directors that was independent of Lennar and KL had not been hired, appointed or retained. Further, KL’s parent, Kennedy Lewis, was acting as Lennar’s strategic advisor prior to the Spin-Off and was not acting in any capacity on Millrose’s behalf, including with respect to the negotiations of any of these agreements, which means that Kennedy Lewis’s interests are also not aligned with (and in some respects may be adverse to) Millrose’s and Millrose Holdings’ interests. As a result of these factors, the terms of these agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated parties, or that would have resulted if we had been an active company with leverage and resources to negotiate with Lennar. Some of the terms included in these agreements also make it difficult for us to amend the agreements without undue hardship and significant costs and expenses, in addition to obtaining written consent from Lennar. Certain of the rights granted to Lennar in the Founder’s Rights Agreement are exclusive to Lennar, which will require our Board to enforce such rights. Other terms included in these agreements may hinder our ability to expand and grow our business, including with respect to attracting new customers to use the HOPP’R or being able to successfully negotiate competitive terms with customers other than Lennar. Even though we are independent from Lennar, there is no guarantee that we will be able to renegotiate, amend or terminate any agreements (or specific terms in such agreements) with Lennar that we deem not to be favorable to us or adverse to our interests as a standalone company, and our continued obligations under these agreements may have a material adverse effect on our business, growth opportunities, financial condition and results of operations. In addition, the Transferred Assets and Supplemental Transferred Assets have been placed in pools by Lennar pursuant to certain Multiparty Cross Agreements. Future Property Assets acquired pursuant to the Lennar Agreements will also be pooled in accordance with additional Multiparty Cross Agreements (or added to existing Multiparty Cross Agreements), provided that the aggregate sum of all Option Deposits Lennar has made, or is obligated to make with respect to such new pool of Future Property Assets, shall not at any time exceed $50,000,000 with respect to pools of the Transferred Assets and the Supplemental Transferred Assets and $25,000,000 with respect to pools of Future Property Assets. Pools will be established with primary consideration given to diversity within pools across geographies, communities and home types. The negotiations and decisions on the selection of the Pool Properties and the pooling of various communities together were solely done by Lennar, with input from Kennedy Lewis. As we did not have any management or personnel during this time, the discussions relating to the pooling were done for the sole benefit of Lennar and the metrics used in considering which land assets should be pooled may not be comparable to standard market pooling considerations. There can be no guarantees that the constitution of each of the pools selected by Lennar with regard to the Transferred Assets and the Supplemental Transferred Assets will be favorable to us, which may result in certain pools of assets decreasing in value at the same time as a consequence of negative impacts that may impact all of the assets in a certain pool. Although the pools should be selected according to certain broad-based principles of diversification, there remains a substantial amount of discretion and judgment in selecting the Pool Properties and setting the pools. In the future, we cannot guarantee that we will be able to negotiate better pooling conditions with Lennar or any Lennar Related Ventures, or that we will be able to negotiate any pooling conditions at all with any Other Customers. In addition, we may be limited in how much we can negotiate with Lennar: we do not have as much leverage with Lennar in negotiating the pooling of Future Property Assets as we are significantly dependent on the Lennar Agreements, and Lennar is under no obligation to offer us business following the initial transfer of the Business Assets and outside of utilizing the HOPP’R for the Transferred Assets and the Supplemental Transferred Assets. Lennar can decide to use a traditional Land Banking provider instead of Millrose if they do not like the terms they have with us (including with respect to any pooling decisions). Any exercise by Lennar of its Enforcement Rights pursuant to the Founder’s Rights Agreement may severely negatively impact our business operations and financial condition. In the event Millrose refuses to sell any Homesite to Lennar upon Lennar’s exercise of a Purchase Option, Lennar has an Enforcement Right to compel Millrose to sell Lennar the Homesite(s). If Millrose does not sell the 51 Table of Contents Homesite(s) to Lennar by the end of the 10 day cure period, Lennar has the immediate right, without penalty and without further notice, to stop payment on all Monthly Option Payment obligations with respect to all properties subject to the Lennar Agreements, and such cessation of payments is not considered a default or breach under the terms of the Lennar Agreements. However, if Millrose alleges in good faith that Lennar does not have the right to purchase the Homesites, solely because Lennar’s exercise violated specifically identified pooling cross-termination rights under the applicable Multiparty Cross Agreement(s), then Millrose must notify Lennar of the dispute prior to the end of the ten-day cure period. However, in the event of such a dispute, Millrose is still required to immediately sell the exercised Homesite(s) to Lennar, but Lennar must continue to pay the Monthly Option Payments. In other words, Millrose must still sell the Homesite(s) as if Lennar were in the right, and then litigate the issue to seek remedy and/or compensation. Such litigation could be very costly and take years to resolve, and not be economically worth pursuing, leaving Millrose without other forms of recourse to recoup any potential losses. If Millrose refuses to sell the Homesite(s) to Lennar for which the Purchase Option has been exercised, then Lennar’s Enforcement Rights allow it to immediately stop all Monthly Option Payments on all properties covered by the Lennar Agreements (and any other option agreements between Lennar and Millrose), which could jeopardize Millrose’s ability to maintain enough working capital to maintain its business operations, and could also jeopardize its ability to make distributions to stockholders that are required to maintain its REIT qualification. As such, any time there is a dispute with Lennar concerning the exercise of Purchase Options, Millrose would be in the disadvantaged position of having to give up the assets or perform the obligation before the dispute is resolved, and then go through the cost- and time-intensive exercise of litigating the matter through the courts to try and reclaim the loss (or, if it decides not to pursue litigation, it likely would need to absorb the costs). These Enforcement Rights makes any potential dispute with Lennar (with respect to Homesite takedowns) very expensive and cumbersome for Millrose, with strong financial incentives to defer to Lennar even during situations where there may be a good faith dispute with the facts in favor of Millrose. If a dispute is litigated and resolved in favor of Lennar, these Enforcement Rights and the payments required under them would be in addition to any damages that may be otherwise awarded to Lennar by the court, further enhancing the risk that any such dispute would result in material adverse impact on Millrose’s financial condition. If a dispute is resolved in Millrose’s favor, the payments set forth in the Enforcement Rights to Millrose may not be sufficient to cover the actual loss experienced by Millrose, even supplemented by the damages that a court might order. Any exercise by Lennar of its Enforcement Rights pursuant to the Founder’s Rights Agreement may therefore severely negatively impact Millrose’s business, operations and financial condition, as well as Millrose’s ability to enforce the terms of its agreements with Lennar. We have not obtained independent appraisals or fairness opinions as to the value of any of our real estate assets or any environmental reports on any of our real estate assets, including the Transferred Assets, and we rely upon Lennar and our Other Customers for certain information regarding the Homesites. No independent appraisals have been obtained to support our conclusions as to the value of our total assets or the value of any particular property. We also did not obtain any independent third-party valuation or fairness opinion as to the value of the Transferred Assets. Appraisals we may obtain in the future from third-party appraisers may be overstated or market values may decline. We are relying on Lennar as to the value of our total assets or the value of any particular property and the Transferred Assets have been conveyed to us in their then current condition. Additionally, following the Spin-Off, we received information regarding the number and location of Homesites included in the Transferred Assets, which, in some cases, remains subject to further confirmation by Lennar. We rely upon Lennar and our Other Customers for information regarding the Homesites that we acquire that may be subject to change as Lennar and Other Customers provide different or additional information as part of the acquisition process and during the period we own the Homesites. We did not obtain any Phase I or similar environmental reports completed by independent environmental consultants for the Transferred Assets in connection with the Spin-Off. Although each of the Lennar subsidiaries 52 Table of Contents that owns the Transferred Assets prior to the Spin-Off made certain representations and warranties (including with respect to title and environmental condition) to the Property LLCs with respect to the Transferred Assets, no assurances can be given that a material environmental condition does not exist as to any one or more of our land assets. There can be no assurances that any representations and warranties given in connection with any acquisitions of Future Property Assets pursuant to the agreements with Lennar will be sufficient to protect Millrose or its subsidiaries from liability or risk exposures in the event there are title or environmental issues that could result in material adverse impacts to Millrose’s business, financial condition or results of operations. Ownership of land and other real estate assets is subject to environmental risks and liabilities, which may not be covered by the representations and warranties and indemnities provided to us in the Lennar Agreements (or any future HOPP’R agreements with new customers). Ownership of land and other real estate assets is subject to risks associated with environmental hazards. Although most of the Transferred Assets have all approvals and permits, including all environmental approvals and permits, we may incur substantial liabilities and costs for environmental matters. Specifically, although Lennar, which owned the Transferred Assets prior to the Spin-Off, made certain representations and warranties (including with respect to title and environmental condition) with respect to the Transferred Assets and entered into an agreement with Millrose making certain representations and warranties with respect to the Supplemental Transferred Assets, such representations are limited to liabilities known at the time of the Spin-Off and the Supplemental Transferred Assets Transaction, respectively. As such, Millrose and Millrose Holdings are still responsible in the event anything new is discovered or in the event the original consultants missed anything in their reviews and evaluations. With respect to any Future Property Assets, there can be no assurance that such assets will already be fully entitled and have received full approvals and permits prior to our acquisition of them pursuant to the HOPP’R arrangements with Lennar, any Lennar Related Venture or Other Customers, as applicable. In such cases, unless we can separately negotiate to divert liability risk to the customer (such as the put back right that we have with Lennar with respect to certain Future Property Assets), we will likely be responsible for such risk exposures and liabilities. Under various laws, owners of land and other real estate assets may be required to investigate, clean up and remove hazardous substances present at or migrating from properties they own or operate and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. The costs and damages that may arise from environmental hazards may be substantial and are difficult to assess and estimate for numerous reasons, including uncertainty about the extent of contamination, alternative treatment methods that may be applied, the location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it may take to remediate contamination. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us to incur costs to comply with. Any actions we may take to comply with such requirements, as well as any actions we may take to mitigate these risks and liabilities may be costly and could impact our business, financial condition or results of operations. We are subject to a wide range of general and industry-specific laws and regulations relating to the protection of the environment which require compliance that can be burdensome and expensive. We are subject to a wide range of general and industry-specific laws and regulations relating to the protection of the environment, including silvicultural activities, including use of pesticides and herbicides, harvesting, and road building, endangered and at-risk species, stormwater and surface water management, air emissions, the cleanup of contaminated sites, health and safety matters, building codes and other related regulations. As such, and although Lennar made certain representations and warranties (including with respect to title and environmental condition) to Millrose with respect to the Transferred Assets under the Lennar Agreements, we may incur significant capital, operating and other expenditures to comply with applicable environmental laws and regulations if the provisions in the Lennar Agreements are not sufficient to adequately shift liability risk to Lennar. There can also be no assurance that we will be able to receive similar (or any) such 53 Table of Contents representations and warranties from any Lennar Related Ventures or Other Customers in the future. We also could incur in the future substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting our operations or requiring remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations on land we currently own or have owned in the past. Such costs would be incurred by Millrose directly, as they would not be paid for by our Manager pursuant to the Management Agreement. Because environmental regulations are constantly evolving, we may continue to incur costs to maintain compliance with those laws and our compliance costs could increase materially. In addition, air emissions, stormwater, and surface water management regulations may present liabilities and are subject to change. Future compliance with existing and new laws, regulations, environmental permits, and other requirements may disrupt our business operations, increase potential liabilities, and require significant expenditures. Additionally, we may be subject to conservation laws and regulations that apply to activities that would adversely impact a protected species or significantly degrade its habitat. Although permits and approvals are in place, or will be in place, for all construction sites as required with respect to protected species, certain species on the Transferred Assets or the Supplemental Transferred Assets may become protected in the future under new laws and regulations. Additionally, species protected under current laws and regulations may be discovered on the Transferred Assets or the Supplemental Transferred Assets in the future. Current or future regulations, including increased mandates for biodiversity, increased wildlife habitats, additional species classified as endangered, or if the enforcement of endangered species regulations become more restrictive, development on the Transferred Assets or the Supplemental Transferred Assets may be restricted and our business, financial condition or results of operations may be adversely impacted. There can be no assurance as to what permits and approvals may be in place with respect to any Future Property Assets. Lennar’s Work on the Transferred Assets and on any Future Property Assets we (through Millrose Holdings) acquire in connection with our ongoing relationship with Lennar may negatively impact our business. Pursuant to the Master Construction Agreement and as part of the Lennar Services, Lennar has the obligation to complete Horizontal Development of the properties comprising the Transferred Assets and any Future Property Assets we may acquire pursuant to the Lennar Agreements. Lennar’s Work does not include home construction (foundations or higher). Under the Master Option Agreement, Lennar has the option, but not the obligation, to undertake home construction on any Homesites once Horizontal Development has been completed. Pursuant to the Lennar Agreements, Millrose Holdings must finance the Horizontal Development, up to certain predetermined development cost budgets, but is not required to participate in any development activities itself. The Work done is entirely by Lennar and any third-party providers that Lennar contracts to complete the Work. The Horizontal Development budget for each Homesite project is not intended to cover amounts owed in connection with any liabilities that may arise from construction. Construction activity on the land could also result in environmental consequences that we may be required to pay for or fix, which could severely impact our available cash for operations, our ability to maintain business, financial condition or results of operations. While Lennar has previously completed Phase I reports with respect to the Transferred Assets and may be protected from liability for pre-existing environmental conditions as a result of exercising the process known as All Appropriate Inquiries (“AAI”), which process evaluates a property’s environmental conditions to assess potential liability for any contamination, we do not have any AAI or other defense to any environmental liability, which could result in significant adverse impacts to our business, financial condition or results of operations. Lennar has agreed to indemnify us against any impacts resulting from the realization of certain Horizontal Development risks. However, the indemnities provided by Lennar in the Lennar Agreements may not be sufficient to cover every liability that may be incurred, and we are still responsible for maintaining certain types of insurance with respect to the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets. Additionally, we could be held jointly and severally liable for certain environmental liabilities. Further, the value of the indemnity will be dependent on the creditworthiness of Lennar. There can also be no assurance that we will be able to successfully negotiate similar or any indemnities from any Lennar Related Ventures or Other Customers who may be future customers. 54 Table of Contents Notwithstanding Lennar’s Work, Lennar could decide at any point not to continue or finish any Horizontal Development or home construction that it has started. The Master Construction Agreement is guaranteed by Lennar (at the parent company level) and obligates specific performance for completing the Horizontal Development, but we would have no remedies against Lennar if they were to stop home construction, as the Lennar Agreements do not obligate Lennar to do any home construction and therefore do not impose any monetary penalties or obligate specific performance in the event Lennar does not finish any home construction. If Lennar defaults or otherwise does not exercise its Purchase Option on any such Homesites and there is unfinished home construction, we may have a harder time selling the Homesite to other buyers who may not be able to or may not want to finish the home construction that Lennar started. If the home construction needs to be undone before any buyer will purchase the Homesite, that would result in additional costs to us that we may not have the financial capability to manage, or that could impact our ability to continue our other operations or to maintain enough capital reserves for Future Property Asset acquisitions. If we or Lennar enter into bankruptcy, the Master Program Agreement or the Master Option Agreement may be unenforceable. In the event Lennar or Millrose would file for, or is involuntarily entered into, bankruptcy, the Master Program Agreement or the Master Option Agreement may be recharacterized as a secured financing agreement, lease, or executory contract and involuntarily amended or rejected. Given the importance of the Master Program Agreement and the Master Option Agreement for our business model and our reliance on the purchase options and the interest payments pursuant to the Master Program Agreement and the Master Option Agreement for our results of operation, we and Millrose Holdings may not be able to generate any operating revenues in the event of a bankruptcy. As a result, if Lennar enters into bankruptcy, it is likely that we will also be forced to enter into bankruptcy, unless we are able to provide the HOPP’R to or maintain other relationships with Lennar Related Ventures and Other Customers. If we cannot quickly identify, successfully negotiate and enter into new HOPP’R agreements with Lennar Related Ventures or Other Customers, which may be limited by the Capital Priority Right, our business and sources of income may suffer. Our primary land assets in our Real Estate Portfolio are the Transferred Assets and the Supplemental Transferred Assets. The properties in the Transferred Assets and the Supplemental Transferred Assets are expected to have a short cash conversion cycle. While this means that we can initially expect to regularly receive cash inflows in the form of Monthly Option Payments and payments in the amount of Takedown Prices whenever Lennar exercises its Purchase Options, we may cease to have continued cash inflows once the Transferred Assets and the Supplemental Transferred Assets have completely turned over if Lennar does not offer us new additional business (through Future Property Assets that Lennar may present to us to acquire under the Lennar Agreements or through references of Lennar Related Ventures that we would engage as new customers) and we cannot otherwise provide the HOPP’R to or secure other agreements with any Other Customers. While we have been offered and expect to be offered additional transactions from Lennar with respect to Future Property Assets, there is no certainty as to when, how often, and to what extent this will occur. While the Lennar Agreements do not have an expiration date, Lennar is under no obligation to commit to any future transactions with Millrose Holdings or give Millrose Holdings any new business at all (including any referrals of Lennar Related Ventures) under the Master Program Agreement. The Lennar Agreements provide Lennar with a Capital Priority Right and contemplate an ongoing business relationship between Millrose and Lennar, whereby Millrose would provide the Recycled Capital HOPP’R to Lennar for any Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements, but the Lennar Agreements do not include any exclusivity, rights of first refusal or first look or other priority rights for us with respect to any future business opportunities. This means that Lennar can decide not to offer us any additional business (beyond the Transferred Assets and the Supplemental Transferred Assets) for any reason at all, including, but not limited to, using traditional land banks or establishing another entity that will operate a HOPP’R, or if the business terms of the Lennar Agreements (individually or in 55 Table of Contents the aggregate) are not as competitive as others in the market. Additionally, Lennar’s Land Banking arrangements with other providers could limit how many business opportunities we will be able to receive from Lennar with respect to Future Property Assets on a going-forward basis. Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, but there is no guarantee that Millrose will continue to be successful in negotiating agreements with such additional potential customers and there is no guarantee that Millrose will be able to secure any business arrangements with any home builders outside of Lennar in any given timeframe. As such, an important part of our business strategy is to seek additional customers that wish to contract with us to utilize the HOPP’R in order to diversify our customer base and grow our business. In accordance with the terms of the Lennar Agreements, Lennar may refer any Lennar Related Ventures to us, and we are obligated to enter into HOPP’R agreements on terms substantially similar to the terms of the Lennar Agreements with them if they fulfill the requirements set forth in the Lennar Agreements and described under “Part I, Item 1. Business—Land Banking Reimagined—Future HOPP’R Arrangements with Lennar and Lennar Related Ventures.” However, Lennar is under no obligation to refer any Lennar Related Ventures or Other Customers to us, and there can be no assurance as to when such referrals may happen, how often they may happen, and how many Lennar Related Ventures or Other Customers may be referred to us. There can also be no guarantee that we will be able to contract with any Lennar Related Ventures, outside of the obligatory ones that are presented to us. We also intend to identify and negotiate with potential Other Customers to further diversify our customer base and grow our business. It is our Manager’s responsibility under the Management Agreement to find, identify, evaluate and negotiate with any potential Other Customers who may wish to engage Millrose for the HOPP’R. However, there is no guarantee when or if (or to what extent) our Manager will be able to find any Other Customers and that our Manager will be able to successfully negotiate HOPP’R agreements on terms satisfactory to Millrose. Lennar’s Capital Priority Right and Lennar’s Founder’s Rights may impact our Manager’s ability to attract Other Customers, as such rights will be reserved solely for Lennar and are not intended to be offered to Other Customers in future. Furthermore, our Manager may have limitations in negotiating competitive fee structures with Other Customers because Lennar has the right to adjust its Monthly Option Payment rate for subsequent Proposed Projects to any lower rate we may negotiate with any non-Lennar customer. Additionally, many of our competitors in the more “traditional” Land Banking space have significantly larger operations and resources, a much longer operating history and developed reputation, and an established market presence. We are a newly-formed company with a limited operating history and reputation and, even though our Manager manages our operations and has an extensive experience in managing Land Banking entities, there can be no certainty as to how much credibility the market will ascribe to Millrose, purely by virtue of our Manager being the Manager. Even if our Manager does find suitable Other Customers, those new business opportunities may not be exclusive to Millrose and will be subject to our Managers’ Allocation Policy. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement” for more information. If we are not able to attract Other Customers, then our risk exposures related to having all of our source of income tied to Lennar will be further heightened. If we are not able to attract new customers other than Lennar, and Lennar does not offer us new transactions, we could lose our source of revenues and income. If we are not able to attract new customers on the terms we desire, or if the terms we negotiate with any potential customers are not favorable to us or expose us to significant risks, then our business, financial condition and results of operations and our ability to perform on our other HOPP’R agreements may be materially and adversely affected. If the market value of our Real Estate Portfolio declines, our profits could decrease, and we may incur losses. Land assets are generally valued in the market using different metrics than those used to value Homesites. Inventory risk can be substantial for land assets, as the market value of such assets can fluctuate significantly as a result of changing market conditions, both in relation to the land itself and indirectly from fluctuations in the supply and demand for prospective Homesites, existing Homesites and other housing inventories. In addition, 56 Table of Contents inventory carrying costs can be significant and can result in losses in a poorly performing community or market. We may be required to write-down the value of our land assets in accordance with GAAP, and some of those write-downs could be material. Any material write-downs of assets could have a material and adverse effect on our business, financial condition and results of operations. In the event of adverse changes in economic, market or community conditions, Lennar and any Other Customers may cease further development activities in certain communities or geographical areas, restructure some or all of the existing HOPP’R agreements with us or elect not to exercise their land purchase options at all. There are contingencies built into the Lennar Agreements to allow Lennar to pause activities — including a “pause period,” based on specified changes to the market whereby for two periods of six months each Lennar may pause its Horizontal Development and “pause” any Purchase Option windows, and lower its Monthly Option Payment fee rate to 50% of the Applicable Rate. In addition, Lennar and the Millrose may mutually agree to designate two additional pause periods of up to six months each for a total of up to two years. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Master Option Agreement” for more information. Depending on the market for new home communities and Homesites in areas where we will own land, the value of some of the land assets we will own could decline to less than the transfer value assigned to that land. Even though the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets we may acquire in the future will be subject to Lennar’s and any Other Customers’ options to purchase the Homesites, if the value of the Homesites we develop is less than the purchase prices attached to those purchase options, then Lennar and/or any Other Customers may not decide to exercise their purchase options. Lennar (and potentially certain Lennar Related Ventures in the future) is subject to certain pooling and cross-termination provisions in the Multiparty Cross Agreements, but there can be no assurance that those provisions will serve as sufficient incentive for Lennar (or anyone else subject to similar provisions in the future) not to terminate or forfeit their purchase options. There are also exceptions to the pooling and cross-termination rights we have with Lennar (such as the fee building exception), and there can be no assurance that we will be able to negotiate any form of pooling and cross-termination rights with any Type 2 Lennar Related Ventures or any Other Customers. Any termination or forfeiture of any purchase options prior to the exercise date of the applicable takedown schedule would result in a loss of monthly option payments anticipated in respect of such arrangements and the loss of potential sale of land assets to such customer at the predetermined takedown price. Accordingly, we may have to hold such land assets for many years without a potential buyer, and in some instances we may have to sell land assets for less than what Lennar or any Other Customers would have paid if they had exercised their purchase option. The failure of Lennar or any other customer to exercise their land purchase options may result in a loss that could have a material adverse effect on our business, financial condition and results of operations. Past performance by the management team who are employees of Kennedy Lewis and their respective affiliates may not be indicative of future performance of an investment in us. KL acts as the Manager and is responsible for employing all our management, employees and other personnel, and running all our business operations. KL is an affiliate and wholly-owned subsidiary of Kennedy Lewis, which has extensive experience in the Land Banking industry. However, our business differs from that of existing investment funds, accounts or other investment vehicles that are or have been managed by Kennedy Lewis or its affiliates, or by other members of Kennedy Lewis’s management team. In addition, the other entities currently managed by Kennedy Lewis in the Land Banking industry are significantly different from us in terms of targeted assets, geographical areas, regulatory structure and limitations, investment strategy and objectives and investment personnel. Further, Kennedy Lewis has no experience managing a public company. Past performance of the management team provided by KL and appointed by our Board, Kennedy Lewis itself, Lennar or any related affiliates is not a guarantee of future results, and there can be no assurance that we will achieve comparable results of those entities. Prior to the Spin-Off, Millrose was a wholly-owned subsidiary of Lennar and all financial statements and results of operations of the Predecessor Millrose Business are derived from 57 Table of Contents Lennar’s financial statements. However, Lennar’s past performance and results of operations are not an indication of Millrose’s potential future results, as we will not be managed by any Lennar personnel (except to the extent of the Lennar Services) and our business operations will not be as diversified as Lennar’s. We also cannot assure you that KL will be able to replicate the historical results achieved by entities managed by affiliates of Kennedy Lewis or members of the management team, and our business returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated. You should not rely on the historical record of the performance of KL’s management team, Kennedy Lewis, Lennar or businesses associated with them as indicative of our future performance of an investment in us or the returns we will, or are likely to, generate going forward. If we are not able to raise additional capital to fund our operations, or if we cannot access capital on attractive terms, we may not always have sufficient funding to maintain our operations. We entered into the Credit Agreement, which provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion, and may also seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers. However, there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit. In the future, Millrose may also seek additional third-party financing to satisfy any additional capital needs or raise capital through equity and debt issuances into the market. Sustained high interest rates, rate hike increases, prolonged high inflation, economic downturn and possible recessions in the future may impair our ability to pay taxes and expenses to continue our operations. As a newly-formed company with limited operating history, limited assets and no guarantors, it may be difficult for us (including Millrose Holdings) to obtain sufficient sources of capital funding, particularly during times of volatile or adverse economic and market conditions. Given our lack of credit history and ratings, the structure of the Promissory Note and the nature of certain terms of the Lennar Agreements (including the Recognition Agreement), we (including Millrose Holdings) may not be able to secure additional loans on attractive terms or at all, and we may be limited in our and Millrose Holdings’ ability to access the capital markets on terms acceptable for our business. Further, our ability to pursue equity capital raises during the first 18 months following the Spin-Off may be limited by Lennar’s Effective Equity Price Protection Right, which may result in dilution and downward pressure on our Class A common stock trading price and in turn the value of our Class B common stock. Additionally, pursuant to the Lennar Agreements, we may not enter into any third-party financing arrangements if such financing arrangement would cause our debt to equity ratio to exceed 1:1, unless it obtains the prior approval of Lennar. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms of such financing transactions may include liquidation or other preferences that adversely affect the rights of our stockholders. Such capital raises would also impact how we are able to use our available capital, given Lennar’s Capital Priority Right. Debt and receivables financings may be coupled with an equity component, such as warrants to purchase shares of our common stock, which could also result in dilution of our existing stockholders’ ownership. Capital raises through the issuance of equity or debt may also impact the stock price or value of our Class A common stock and Class B common stock, and if the stock price is suppressed, we may not be able to raise the capital we need through equity issuances. We may be subject to stringent covenants and restrictions on the type of debt financing we may be able to secure in the future. If we face any challenges or obstacles in raising additional capital or securing third-party financing, including if we cannot do so on terms favorable to us or at all, our operating cash flow may be insufficient to satisfy our financial obligations. If financing is not available when we or Millrose Holdings need it, or is available on unfavorable terms, we may be unable to efficiently manage our Real Estate Portfolio, perform our obligations under our HOPP’R agreements (for example, financing the Work under the Lennar Agreements), 58 Table of Contents complete acquisitions of Future Property Assets or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could materially and adversely affect our business, financial condition and results of operations. Volatility in the market may impact our ability to do business. Any sustained period of high interest rates and high inflation may increase operating costs, reduce the value of our Real Estate Portfolio, increase the cost of capital and make raising capital difficult for us and Millrose Holdings, as applicable. Typically, home demand and prices will increase in low interest rate environments, but there can be no guarantee that this will always happen or that we will be able to capitalize on the increased demand and prices if and when it does happen (and in any event, since we are not selling homes ourselves and only on behalf of our customers, so any potential benefits would be significantly limited). Changing general economic and financial market conditions could significantly reduce the value of land and other real estate assets, loans and other investments and reduce the amounts earned on those investments. As a newly-formed company, we are also likely disadvantaged in competing with traditional Land Banking providers, some of which may have greater financial resources, a more established, loyal and consistently growing customer base, and stronger ability to weather adverse or volatile economic and market conditions than we do. Many of the competitors in the Land Banking space have significantly larger operations and resources, a much longer operating history and credibility and developed reputation, and an established market capitalization. We are a brand-new company with no prior operating history or reputation and, even though KL manages our operations and has extensive experience in managing Land Banking entities, there can be no certainty as to how much credibility the market will ascribe to Millrose, purely by virtue of KL being the Manager. As such, at any time but particularly in times of market volatility, potential Land Banking customers may desire to contract with more established Land Banking providers than with us, and we cannot guarantee that we will be able to identify or attract any Other Customers who will want to utilize the HOPP’R. As a holding company, our dependence on our subsidiaries for cash flow may negatively affect our business. We are a holding company with no business operations of our own and we conduct all of our land acquisition and development operations through our subsidiaries. A separate Millrose Subsidiary will provide the Recycled Capital HOPP’R to each Other Customer. Millrose Holdings will provide the Recycled Capital HOPP’R to Lennar through the Property LLCs. Millrose Holdings may also provide the Recycled Capital HOPP’R (or other forms of the HOPP’R, as the case may be) to Lennar Related Ventures (with approval from Lennar, to be provided at Lennar’s discretion) or Millrose may provide the Recycled Capital HOPP’R to such Lennar Related Ventures through one or more Other Subsidiaries as determined by Lennar and our Manager. A new Millrose Subsidiary will be formed to provide the Recycled Capital HOPP’R to each Other Customer as such customer finalizes negotiations and commits to engaging with Millrose. All or substantially all of Millrose’s assets currently consist of (i) 100% of the membership interests of Millrose Holdings and (ii) the Promissory Note. Millrose Holdings and Other Subsidiaries will distribute to Millrose (subject to limitations on the portion of Millrose’s income that can be dividends in compliance with the REIT Requirements) (i) net earnings generated from the Monthly Option Payments after payments for taxes and expenses (including the Management Fee), and (ii) monthly interest payments on the Promissory Note (which is currently approximately $358 million annually based on a 7.5% interest rate), and such amounts will then be distributed by Millrose as dividends to Millrose’s stockholders, consistent with or in excess of the amount that would satisfy applicable REIT Requirements. Accordingly, our ability to pay our obligations is dependent upon dividends, interest payments and other distributions from our subsidiaries to us, and our subsidiaries’ ability to earn revenue is dependent on our customers’ performing its obligations under the HOPP’R agreements they have with us (which, at least initially, is solely Lennar performing its obligations under the Lennar Agreements). The ability of our operating subsidiaries, including Millrose Holdings, to pay dividends to us are expected to be restricted by REIT qualification requirements, applicable Maryland law and the terms of any outstanding debt or credit facilities, and our reliance on Lennar to continue providing us with more deals. 59 Table of Contents As a holding company, we are completely reliant on the success of the businesses operated by our subsidiaries. Millrose intends to provide the HOPP’R to each customer through a separate subsidiary. For example, Millrose Holdings provides the HOPP’R to Lennar through the Property LLCs. Millrose Holdings may also provide the HOPP’R to Lennar Related Ventures (with approval from Lennar, to be provided at Lennar’s discretion) or Millrose may provide the HOPP’R to such Lennar Related Ventures through one or more Other Subsidiaries as determined by Lennar and our Manager. Millrose has also sought to provide the HOPP’R to Other Customers for purposes of diversification and scaling business growth. To the extent we provide the HOPP’R to any Other Customers, it will be done through Other Subsidiaries and pursuant to agreements that will be negotiated on behalf of Millrose by our Manager. Additionally, in the event that Millrose provides the HOPP’R to Other Customers, it will likely need third-party financings to do so. We entered into the Credit Agreement, which provides for a revolving credit facility with commitments in an aggregate amount of $1.335 billion, and may also seek to pursue additional debt financing, all of which may be available to manage cash needs and reduce drag on returns, as well as for use to provide the HOPP’R to Other Customers. However, there is no guarantee that such sources of additional cash will be obtained or will be sufficient to cover all of our business growth initiatives. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources Following the Spin-Off” for more information. Additionally, the ability of Millrose to obtain additional debt financing is subject to the Debt to Equity Ratio Limit. In no event will the HOPP’R be provided to Other Customers through Millrose Holdings or any Other Subsidiaries that provide the HOPP’R to Lennar. However, this means that the sustainability of any given subsidiary will be dependent on the customer for which that subsidiary provides the HOPP’R. If one customer defaults on its obligations and fails to perform under its HOPP’R agreements with us, it may force that subsidiary into credit defaults or bankruptcy, which may impact the operations of our other subsidiaries, including Millrose Holdings, and our business, financial condition and results of operations. If the customer is significant enough (e.g., Lennar), our entire operations may be impacted and Millrose itself may need to enter into bankruptcy proceedings. Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act. We intend to continue to conduct our operations so that neither we, nor Millrose Holdings nor the Property LLCs nor the Other Subsidiaries are investment companies under the Investment Company Act. However, there can be no assurance that we and our subsidiaries will be able to successfully avoid operating as an investment company. A change in the value of any of our assets could negatively affect our ability to maintain our exemption from regulation under the Investment Company Act. To maintain compliance with the applicable exemption under the Investment Company Act, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we may have to acquire additional assets that we might not otherwise have acquired or may have to forego opportunities to acquire assets that we would otherwise want to acquire and would be important to our investment strategy. If we were required to register as an investment company but failed to do so, we would become subject to substantial regulation with respect to our capital structure (including our ability to use borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), and portfolio composition, including disclosure requirements and restrictions with respect to diversification and industry concentration, and other matters. Compliance with the Investment Company Act would, accordingly, limit our ability to make certain investments and require us to significantly restructure our business plan, which could materially adversely affect our NAV and our ability to resume paying distributions to our stockholders. 60 Table of Contents Risks Related to Our Intellectual Property We entered into a HOPP’R License Agreement with a wholly-owned subsidiary of Lennar, which is critical to our business. The HOPP’R Rights are owned by a subsidiary of Lennar, and any changes to the HOPP’R License Agreement will impact our access to the HOPP’R Rights and may adversely impact our business. Millrose’s business consists of providing the HOPP’R to Lennar and other future customers. However, Millrose does not own the HOPP’R Rights and must rely on a HOPP’R License Agreement to access the HOPP’R Rights. In connection with the Spin-Off, a wholly-owned subsidiary of Lennar granted Millrose a non-exclusive, royalty-free, non-transferrable license to use the HOPP’R Rights solely for Millrose’s benefit. Our Manager is entitled to use Millrose’s HOPP’R Rights license in connection with the management and operation of Millrose. Millrose’s HOPP’R Rights license will be perpetual, subject to certain limited termination conditions. As such, Millrose, whether externally managed or internally managed, is expected to always have access to the benefit of the HOPP’R Rights, although there is no guarantee that this will always be the case. If Lennar’s subsidiary (or any future owner of the HOPP’R Rights) decides at any point to terminate Millrose’s HOPP’R Rights license as permitted in certain limited circumstances under Millrose’s HOPP’R License Agreement, Millrose will lose access to the HOPP’R Rights. Any loss of access to the HOPP’R Rights could disrupt Millrose’s business operations and prevent Millrose’s ability to provide the promised services under the Lennar Agreements and any other HOPP’R agreements with Other Customers in the future, heightening the risk of breach of contract claims and other lawsuits. Losing access to the HOPP’R Rights could also prevent Millrose from being able to engage new customers who want to use the HOPP’R. Any loss of access to the HOPP’R Rights could have a material impact on our business, financial condition or results of operations. Additionally, since we are the first publicly traded company to engage in large-scale recycled capital financing of land acquisition and Horizontal Development using the HOPP’R, and Lennar has historically not publicized or used the HOPP’R externally, we are responsible for promoting the use and reputation of the HOPP’R trademark in the public markets. Although the HOPP’R is identified as what we provide to our customers and be linked to our brand, quality and service experience, we do not own the trademark rights to “HOPP’R” and our license to use the HOPP’R trademark is non-exclusive. As such, we have no control over who else may have rights to use the HOPP’R trademark in the future, what the trademark will be used for, and whether the uses will be consistent with the way in which we use the HOPP’R trademark. Additionally, Lennar (through its subsidiary) as the owner of the trademark is able to set certain covenants, guidelines and standards with respect to the trademark. There can be no assurance that any such restrictions that Lennar or its subsidiary (or any successor assignee of the trademark) will maintain standards in line with the way we intend to use the HOPP’R trademark. If any covenants, guidelines or standards are be consistent with our use of the trademark, it could negatively impact our marketing strategies, which could affect our business operations and financial condition. Our business relies on our ability to provide the HOPP’R, including the Recycled Capital HOPP’R, to our customers, and we may lose our competitive advantage against other land banks as other entities in the future may also acquire a license to provide the HOPP’R to their customers. Millrose’s business consists of providing the HOPP’R to Lennar and other future customers. However, Millrose does not own the HOPP’R Rights and must rely on the HOPP’R License Agreement to access the HOPP’R Rights. Millrose’s HOPP’R Rights license is non-exclusive and will be granted by a wholly-owned subsidiary of Lennar. As such, Lennar’s subsidiary may grant from time to time a license to use the same HOPP’R Rights as Millrose to Lennar, its affiliates and any other entity it deems appropriate at its sole discretion. Because Lennar’s subsidiary (or any future owner of the HOPP’R Rights) may license the HOPP’R Rights to other land banks and other external managers that manage land banks, our business could suffer, as we might no longer be the only publicly traded entity that will engage in large-scale recycled capital financing of land acquisition and Horizontal Development using the HOPP’R. In the future, other companies may develop their own versions of the HOPP’R, 61 Table of Contents there can be no assurance that Millrose’s HOPP’R will be able to provide the same features that competitor companies providing the HOPP’R may have and at the same prices that competitor companies providing the HOPP’R may be able to offer. In turn, there can be no certainty as to whether our customers will remain with us if our future competitors that also provide the HOPP’R offer better services and/or better prices than we can. The potential loss of Millrose’s customer base, or even the expectation or appearance that we may be losing our customer base, could adversely affect Millrose’s business, financial condition and results of operations. If we lose our competitive advantage as the only publicly-traded company that provides the HOPP’R, we will need to rely on other strategies and find other distinguishing factors to market our business in this niche industry, which includes many competitors that have significantly larger operations and resources, a much longer operating history as land banks, more credibility and developed reputation in the industry and an established market capitalization. Many of these competitors are also unencumbered by some of the restrictions to which we are subject, including our Debt to Equity Ratio Limit and the Founder’s Rights, which may be viewed unfavorably by certain key stakeholders. If we are not successful in pivoting our marketing strategy and finding other ways to compete against our peers and capitalize on other advantages that we may have, there could be a material adverse impact on our business, financial condition and results of operations. Risks Related to the Land Banking Industry There are substantial risks inherent in owning land for new home construction. By providing an operational and capital solution for home builders and land development companies to finance the acquisition and development of land assets, Millrose is exposed to substantial risks in owning land assets for Lennar, and any Other Customers, which may or may not purchase these assets for home construction on the timelines we expect or at all. Because the future use of these land assets comes with inherent uncertainties due to the uncertain prospective nature of Lennar’s and any Other Customers’ development plans, the risks inherent in owning land parcels increase as consumer demand for housing decreases and the holding period increases. As a result, we may end up owning land assets on which homes cannot be profitably built and sold. In certain circumstances, a grant of entitlements or development agreements with respect to a particular parcel of land may include restrictions on the transfer of such entitlements to a buyer of such land, which could negatively impact the price of such entitled land by restricting our ability to sell it for its full entitled value. In addition, inventory carrying costs can be significant and can result in reduced margins or losses in poorly performing communities or markets. Additionally, deteriorating market conditions could cause us to record significant inventory impairment charges. The recording of a significant inventory impairment could negatively affect our earnings and negatively impact the market perception of our business. Our business is susceptible to risks from natural disasters, geopolitical events and other events outside of our control that may delay development on the land we hold for Lennar and any Other Customers. The Lennar Agreements and any similar agreements we may enter into with any Lennar Related Ventures or Other Customers in the future require us to hold land assets for our customers while they develop the Homesites before they purchase them from us. The Transferred Assets and Supplemental Transferred Assets are located in various concentrated geographical areas across the United States, and any development of such land assets may be delayed due to natural disasters and geopolitical events that happen in the areas in which these land assets are located. As such, we and our customers are subject to risks and could be exposed to additional costs from adverse weather, natural disasters and adverse impact from global climate change. For example, some of the land assets we own are in zones that are at risk for natural disasters and could be severely damaged or destroyed by such disasters, including unexpected phenomena (for example, earthquakes and landslides) and physical climate risks that could materialize as either singular extreme weather events (for example, hurricanes, tornadoes, floods, storms and wildfires) or through long-term impacts of climatic conditions (for example, precipitation frequency, weather instability and rise of sea levels). Such events may result in delays of development work on such land, which may have material impacts on our business, financial condition or results of operations. 62 Table of Contents Such events could also adversely impact Lennar or our Other Customers if there is damage resulting from such events to any existing work, or to any developments they have already performed on the land assets that we own, pending purchase by Lennar or Other Customers. Insurance may not sufficiently cover all losses sustained by our customers and their stakeholders. If we fail to adequately prepare for such events, our and our customers’ revenues, results of operations and financial condition may be impacted. Additionally, the value of the land may fluctuate over time as a result of factors outside of our control, including, but not limited to, developments on surrounding land that impact the value of our land assets, changes in zoning laws or other regulations that might impact how our customers can use these land assets, and changing trends in the movement of social populations that guide which areas are “hot spots” for development. As of December 31, 2024, a significant amount of the Transferred Assets and the Supplemental Transferred Assets were concentrated in three states (California, Florida and Texas), with a substantial portion located in Florida and Texas. The geographic concentration of such land assets could cause us to be more susceptible to adverse weather, economic or regulatory changes, or developments in the markets in which our future properties will be located than if we owned a more geographically-diverse portfolio. Further, although we are not aware of any pending material issues at this time, the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets we may acquire in the United States are subject to eminent domain, and the compensation we receive from any government entity in connection with an eminent domain acquisition may not be sufficient to cover the costs we may owe our customers in such situations. Our insurance coverage may not cover all potential losses. Our Manager, on behalf of Millrose and Millrose Holdings (including any of its Property LLCs), maintains general liability insurance policies for common liability claims from third parties, including slip and fall accidents and other common third-party risks. Our Manager may also purchase specific insurance policies for individual investments or blanket policies covering multiple investments and participants and their respective affiliates. Additionally, in accordance with the terms of the Lennar Agreements, Lennar is required to maintain certain types of insurance for the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets that Millrose Holdings acquires pursuant to the Lennar Agreements. Our Manager is responsible for confirming that the Transferred Assets, the Supplemental Transferred Assets and any Future Property Assets acquired pursuant to the Lennar Agreements are insured by Lennar consistent with industry standards, and for securing insurance for anything that is not otherwise covered by Lennar’s insurance with respect to the Transferred Assets, the Supplemental Transferred Assets and Future Property Assets. Our Manager expects to maintain insurance policies (similar to the ones subscribed by Lennar) on any Future Property Assets that Millrose, through one of its subsidiaries, may acquire in the future for any potential Lennar Related Ventures or Other Customers that would not otherwise be insured by such Lennar Related Ventures or Other Customers. It is our Manager’s responsibility to ensure that, between the insurance provided by any of our customers and the insurance our Manager secures on our behalf, our entire Real Estate Portfolio is adequately insured, consistent with industry standards, including commercial general liability insurance. Insurance that our Manager secures on our behalf is paid for by our Manager, and such costs are covered by the Management Fee. For additional information, see “Part I, Item 2. Properties—Operating Data on Real Estate Portfolio—Insurance.” However, there is no guarantee that we will always be completely covered by insurance, and there may be gaps that our Manager does not identify in time or at all, which could result in material impacts to our business. Because we are not sourcing and vetting the insurance provided by any customers (including Lennar), the existence and quality of the insurance, including the scope of coverage, is out of our control. As such, we cannot provide any assurance that we will always have sufficient insurance to cover every liability we may be exposed to, whether it be from insurance that our Manager secures for us or insurance from our contractual relationships with Lennar and any Other Customers. In the event any such insurance could lapse (either intentionally or inadvertently) by our customers, we may be negatively impacted if we cannot find adequate alternative coverage in a timely manner and on suitable terms when such lapses occur. Certain losses that may impact our Real Estate Portfolio, including losses from floods, earthquakes, acts of war, acts of terrorism or riots and pandemics, generally are not insured against or not fully insured against 63 Table of Contents because it is not deemed economically feasible or prudent to do so. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, we could experience a significant loss of capital invested and future revenues in these land assets and could potentially remain obligated under any recourse debt associated with the land asset. Pursuant to the Lennar Agreements, Lennar is responsible for all Horizontal Development and any home construction done on the Homesites, including if anything is damaged during development. Lennar is responsible for sourcing and maintaining property insurance coverage for any such damage. However, Lennar’s insurance and responsibility for such risks and damages extends only until they determine not to exercise any Purchase Options with respect to any Homesites. Therefore, in the event Lennar decides not to exercise or forfeit its Purchase Options with respect to any Homesites, we will be fully responsible for any issues that may arise with respect to the land, any completed or in-progress Horizontal Development and home construction Lennar has already done. We may not be able to find adequate or any insurance coverage or other protection in a timely manner if this were to happen, particularly since any such decision from Lennar would impact an entire pool of properties, and not just an individual property. The lack of adequate insurance and protections may also impact our ability to sell the properties to a third-party buyer. Furthermore, we cannot be sure that insurance companies our Manager finds are able to offer products with sufficient coverage for Millrose’s business operations at commercially reasonable rates in cases where Lennar stops their insurance coverage. If we experience a loss that is uninsured or that exceeds insured limits with respect to one or more of our land assets or if the insurance companies fail to meet their coverage commitments to us in the event of an insured loss, then we could lose the capital invested in the damaged land assets, as well as the anticipated future revenues from those land assets and, if there is recourse debt, then we would remain obligated for any mortgage debt or other financial obligations related to the land assets. Any such losses or higher insurance costs could materially and adversely affect our business, financial condition and results of operations. Our inability to successfully acquire an adequate inventory of Future Property Assets at reasonable prices could adversely impact our operations. To the extent that Lennar desires that we purchase any Future Property Assets, pursuant to the Lennar Agreements, Lennar is responsible for identifying any and all Future Property Assets and is responsible for negotiating the purchase price of any such Future Property Assets. As we do not have the ability to identify Future Property Assets ourselves and cannot control the purchase price with respect to any Future Property Assets that we may acquire pursuant to the Lennar Agreements (or any substantially similar agreements that we may enter into with any Lennar Related Ventures or Other Customers in the future), we may not be able to secure any Future Property Assets at reasonable prices, which could adversely impact our operations. There is no guarantee when or if (or to what extent) Millrose, through its Other Subsidiaries, will be able to provide the HOPP’R to any Lennar Related Ventures or negotiate and enter into any similar arrangements with Other Customers. Our results of our operations may in the future depend in part upon our ability to successfully identify, acquire and own an adequate number of Future Property Assets in desirable locations. Even if we have an adequate number of HOPP’R agreements with various customers, there is no guarantee when or if (or to what extent) they will offer us new business opportunities or Future Property Asset transactions. There can also be no assurance that an adequate supply of Future Property Assets will be available to us on favorable terms, or that will make relevant land asset targets for the HOPP’R. Even if our Manager finds any appropriate Future Property Assets, it may not be presented to Millrose’s customers under the Allocation Policy, and such Future Property Assets may instead be allocated to traditional Land Banking entities that Kennedy Lewis manages (who may be our competitors in the market). An insufficient supply of Future Property Assets in one or more of our markets, any hindrance or inability to convey owned Homesites as a result of government shutdowns (or for other reasons), or our inability to purchase or finance Homesites on reasonable terms could have a material adverse effect on our business, financial condition and results of operations. Any land shortages or any decrease in the supply of suitable land at 64 Table of Contents reasonable prices could result in increased land costs. As the fair market value of properties declines from their original values at the time we enter into option agreements with any customers, we may have to reduce option exercise prices in order to induce home builders to exercise options or otherwise to purchase properties from us. Since Lennar has the right to adjust its Monthly Option Payment rate for subsequent Proposed Projects to any lower rate we may negotiate with any non-Lennar customer, a significant portion of our future Real Estate Portfolio, as well as our ability to finance the acquisition and development of land assets for our customers, will likely be impacted in the event our Manager negotiates a lower monthly option payment rate with another customer during a time of market downturns and Lennar exercises its right to adjust its Monthly Option Payments for future Proposed Projects going forward. A decline in prices of new homes could require us to write down the carrying value of land we own. Our assets consist of land that we will hold for Lennar and potentially any Other Customers, to be resold to them for use in home building operations. The value of land suitable for residential development fluctuates depending on local and national market conditions and other factors that affect demand for new homes. When demand for homes fell during the 2007-2009 recession, landowners, such as Lennar, were required to take significant write-downs of the carrying value of land inventory. If market conditions were to deteriorate significantly in the future, we could be required to make significant write-downs of the carrying value of our land assets inventory and we could be forced to reduce the purchase prices in order to induce option holders to purchase properties. Land assets and real estate investments are not as liquid as certain other types of assets, which may reduce economic returns to stockholders. Land assets and real estate investments are not as liquid as certain other types of investments, and this lack of liquidity may limit our ability to react promptly to changes in economic or other conditions. Significant expenditures associated with real estate investments, such as secured mortgage debt payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investments. As we expect to elect REIT status, we will only be able to hold property for sale in the ordinary course of business through TRSs in order to not incur punitive taxation on any gain from the sale of such property. We may dispose of certain land assets that have been held through TRSs subject to our agreements with Lennar or any Other Customers to generate liquidity. To the extent permitted by our existing and any new business arrangements with Lennar and Other Customers, and if Lennar elects not to exercise its option to acquire certain land assets from Millrose Holdings, we may decide to sell land assets to third parties to generate proceeds to fund our capital deployment activities. The price for which we can sell properties to third parties or sell homes we build may be significantly less than the amounts of our investments. Our ability to sell land assets on advantageous terms is affected by: (i) competition from other owners of land assets that are trying to dispose of their land assets; (ii) economic and market conditions, including the capitalization rates applicable to our land assets; and (iii) other factors beyond our control, including general economic conditions. If our competitors sell assets similar to assets we intend to divest in the same markets or at valuations below our valuations for comparable assets, we may be unable to divest our assets at favorable pricing or at all. The third parties who might acquire our land assets may need to have access to debt and equity capital, in the private and public markets, in order to acquire land assets from us. Should they have limited or no access to capital on favorable terms, then dispositions could be delayed. If we (including Millrose Holdings) do not have sufficient cash available to us through our operations or sales of land assets or available credit facilities to continue operating our business as usual, we and Millrose Holdings may need to find alternative ways to increase our liquidity. Such alternatives may include, without limitation, divesting land assets at less-than-optimal terms or incurring debt. There can be no assurance, however, that such alternative ways to increase our liquidity will be available to us or that we will continue to qualify as a REIT if we pursue such alternative ways to increase our liquidity. Additionally, taking such measures to increase 65 Table of Contents our liquidity may adversely affect our business, and in particular, our distributable cash flow and debt covenants in any debt agreements that we may enter into in the future. We cannot make any assurances that our growth or expansion strategies will be successful, and we may incur a variety of costs to engage in such strategies, including through new asset acquisitions, and the anticipated benefits may never be realized. Our significant lack of diversification in our business operations and investment portfolio and our customer base severely limits how well we can compete against traditional Land Banking entities, such that we are not able to carve out a sustainable market share for ourselves and sustain our operations independently from Lennar. Currently, Lennar is our largest customer. Although we seek to identify and negotiate with additional potential Other Customers, as of the date of this Form 10-K, we only have a limited number of definitive arrangements to acquire additional assets, to form or acquire more subsidiaries, or to obtain any other business besides the existing Recycled Capital HOPP’R that Millrose Holdings and Other Subsidiaries will provide to Lennar pursuant to the Lennar Agreements. Millrose (through Millrose Holdings) intends to acquire Future Property Assets for Lennar as part of our ongoing relationship with Lennar, as contemplated and governed by the Master Program Agreement. However, there is no guarantee to what extent this will happen. While the Lennar Agreements do not have an expiration date, Lennar is under no obligation to commit to any future transactions with Millrose Holdings or give Millrose Holdings any new business at all (including any referrals of Lennar Related Ventures) under the Master Program Agreement. The Lennar Agreements provide Lennar with a Capital Priority Right and contemplate an ongoing business relationship between Millrose and Lennar, whereby Millrose would provide the Recycled Capital HOPP’R to Lennar for any Future Property Assets that Millrose Holdings may acquire pursuant to the Lennar Agreements, but the Lennar Agreements do not include any exclusivity, rights of first refusal or first look or other priority rights for us with respect to any future business opportunities. This means that Lennar can decide not to offer us any additional business (beyond the Transferred Assets and the Supplemental Transferred Assets) for any reason at all, including, but not limited to, using traditional land banks or establishing another entity that will operate a HOPP’R, or if the business terms of the Lennar Agreements (individually or in the aggregate) are not as competitive as others in the market. Additionally, Lennar’s Land Banking arrangements with other providers could limit how many business opportunities we will be able to receive from Lennar with respect to Future Property Assets on a going-forward basis. Further, as of the date of this Form 10-K, Millrose has limited business relationships with Lennar Related Ventures and Other Customers. There is no guarantee to what extent Millrose, through its Other Subsidiaries, will be able to provide the HOPP’R to additional Lennar Related Ventures or negotiate and enter into additional arrangements with Other Customers to provide the HOPP’R (either the Recycled Capital HOPP’R or any tailored forms of the HOPP’R with individually negotiated features, which may not be the same features as the Recycled Capital HOPP’R) to such Other Customers. Lennar’s Capital Priority Right may also limit the amount of available capital Millrose has to provide the HOPP’R to customers other than Lennar. While Lennar is Millrose’s largest customer as of the date of this Form 10-K, Millrose has engaged and continues to engage in discussions with other home builders who are interested in becoming new customers, but there is no guarantee that Millrose will continue to be successful in negotiating agreements with additional customers and there is no guarantee that Millrose will be able to secure additional business arrangements with additional home builders outside of Lennar in any given timeframe. In the future, if we are unable to successfully integrate new assets or businesses and manage our growth, our business, financial condition and results of operations may suffer. Lennar has the option, but not the obligation, to refer any Lennar Related Ventures to us. Although we have the obligation to contract with any qualifying Lennar Related Ventures (and the option to contract with any non-qualifying Lennar Related Ventures), there can be no assurance that Lennar will make any such referrals to us. We may not be successful in negotiating and entering into HOPP’R agreements with Other Customers and any future agreements with Other Customers may not be on similar terms to the Lennar Agreements or may be indirectly limited by Lennar Agreements (e.g., because of Lennar’s Capital Priority Right, or due to the limitations to our ability to obtain third-party financing 66 Table of Contents and issue debt because of our Debt to Equity Ratio Limit). Additionally, we may in the future significantly increase the size and/or change the mix of our Real Estate Portfolio or acquire or otherwise enter into new lines of business. We may be unable to successfully and efficiently integrate newly-acquired assets or businesses into our existing operations or otherwise effectively manage our Real Estate Portfolio or our growth effectively. In addition, increases in our Real Estate Portfolio and/or changes in the mix of our Real Estate Portfolio or additional lines of business may place significant demands on our Manager’s administrative, operational, asset management, financial and other resources. Any failure to manage increases in our size effectively could adversely affect our business, financial condition and results of operations. Real estate valuation is inherently subjective and uncertain, and is subject to change, especially during periods of volatility. The valuation of land and real estate and therefore the valuation of our land assets is inherently subjective due to, among other factors, the individual nature of each property, its location, the expected future revenues from that particular property and the valuation methodology used. As a result, the valuation of our land and other real estate assets is subject to a large degree of uncertainty and is made on the basis of assumptions and methodologies that may not prove to be accurate. Regardless of whether a valuation is accurate at the time it is completed, all valuations are subject to change, especially during periods of market volatility or reduced demand for real estate. The valuation of land assets we will hold and loans we may own in the future may not reflect the price at which such asset or loan is ultimately going to be sold (particularly given the terms of our existing agreements with Lennar, and any similar terms we may be subject to in future agreements with other customers), and the difference between that valuation and the ultimate sales price could be material. Valuation methodologies are subject to change from time to time. Additionally, real estate option contracts will be subject to local contract laws that will differ between the various jurisdictions in which we operate, and the underlying real estate to those option contracts will be subject to regulatory risk from federal, state, and local regulators. Our ability to satisfy the asset tests to qualify as a REIT depends upon our analysis of the fair market values of our TRS ownership interests. These fair market values will depend, at least in part, on the values of our TRSs’ land assets, some of which will not be susceptible to a precise determination given their undeveloped nature, and for which we will not obtain independent appraisals. Accordingly, there can be no assurance that the IRS will not contend that our TRS ownership interests cause a violation of the REIT asset tests. We may acquire Future Property Assets, and entities holding such Future Property Assets that involve risks that could adversely affect our business and financial condition. We received the Transferred Assets in connection with the Distribution and also acquired the Supplemental Transferred Assets following the closing of the Supplemental Transferred Assets Transaction. We may also acquire Future Property Assets. The acquisition of such Future Property Assets involves risks, including the risk that the acquired assets will not perform or be suitable for its intended purpose as anticipated. Under the Lennar Agreements, Lennar has the obligation to evaluate, assess and vet any Future Property Assets that it decides, at its sole discretion, to present to us. When we acquire Future Property Assets, we may have to bear the risks associated with entering a new market, such as a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures. KL, while it has extensive experience with Land Banking, also does not have experience as a home builder or real estate developer, or any business that would require extensive knowledge and expertise on land and property acquisitions. As a result, if Lennar or any other customer defaults or otherwise does not exercise its purchase option on any such Homesites following the completion of the Horizontal Development (e.g., the Work that Lennar is required to complete pursuant to the Master Construction Agreement), then we will need to either construct homes on such Homesites on our own (or, with Lennar, exercise our fee building option), engage a third party to construct the homes, or sell the Homesites without completing home construction in order to recover Millrose’s invested capital. Any such home construction and/or disposition may involve significant costs and require real estate development expertise, which KL does not have. As such, we would not be able to do any 67 Table of Contents home construction ourselves without expending significant costs in hiring new personnel who have the requisite skills and expertise, and such costs may not be covered (in part or at all) by the Management Fee we pay to KL. KL may also not be best-positioned to effectively oversee any third-party home builders, as they do not have the relevant experience or expertise in home construction. Selling assets without completing home construction will likely negatively impact the price of the assets, particularly because Lennar would be unlikely to let Purchase Options expire unless the value of the properties has become significantly less than the applicable option exercise prices. Any failure to at least recoup the amounts we have invested in developing and selling such assets would negatively impact our financial results. Additionally, there is, and it is expected there will continue to be, significant competition for land assets that meet the Program Criteria, as well as risks associated with obtaining financing for further acquisitions of land assets. We currently only have one direct subsidiary, Millrose Holdings, which provides the HOPP’R to Lennar. If we engage any new customers in the future, the HOPP’R we provide to any Lennar Related Venture or Other Customer may be provided by one or more of our Other Subsidiaries. Setting up new Other Subsidiaries and land-holding entities to provide the HOPP’R for any Other Customers may require substantial time and resources, including KL finding and hiring additional personnel to manage and operate such arrangements. There can be no assurance that we can do this in a timely manner, or that any delays or issues that arise will not jeopardize or other impact our business relationships with such Lennar Related Ventures or Other Customers. Additionally, Lennar’s extensive skillsets, knowledge, experience and expertise that will be applied to the benefit of Millrose Holdings with respect to Future Property Assets acquired pursuant to the Master Program Agreement will not be available to us for any Future Property Assets acquired for Other Customers. We may change the profile of our Real Estate Portfolio without stockholder consent. Our Real Estate Portfolio primarily includes the Transferred Assets and the Supplemental Transferred Assets. The properties in the Transferred Assets and the Supplemental Transferred Assets are expected to have a short cash conversion cycle. There can be no assurance that the profile of our Real Estate Portfolio will always be similar to that of the Transferred Assets and the Supplemental Transferred Assets. Currently, Millrose’s largest customer is Lennar. Millrose intends to engage additional future customers. Millrose expects that the land assets that it may receive in connection with such other home builders will also be current and future Homesite inventory for the current and future construction of homes, and may be similar to the Transferred Assets in terms of their shorter conversion duration, diversification of geographic markets and development-ready status, but there is no certainty that Millrose will be able to successfully negotiate for land assets that share similar characteristics with the Transferred Assets. Although we expect some of the Future Property Assets we acquire (particularly the ones that we may acquire pursuant to the Lennar Agreements or any agreements with Lennar Related Ventures or potentially Other Customers that have substantially the same terms as the Lennar Agreements) to generally match the profile of the Transferred Assets, we expect that many of the Future Property Assets that we may acquire in the course of providing the HOPP’R to Other Customers outside of Lennar and certain Lennar Related Ventures has a different profile. We may also need to make adjustments to our Real Estate Portfolio based on real estate market conditions and available business opportunities, and we may change our Investment Guidelines at any time without the consent of our stockholders, subject to the terms of our agreements with Lennar. In the future, we may make business decisions that result in us making investments in Future Property Assets that are different from, and possibly riskier than, the Transferred Assets and the Supplemental Transferred Assets described in this Form 10-K. In connection with such changes in our targeted land assets and strategies, our Board may change our policies over time. In the future, a change in our targeted land assets acquisition guidelines may occur without notice to you or without your consent, may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could materially adversely affect the value of our common stock, our ability to make distributions to you and our business, financial condition and results of operations. 68 Table of Contents Risks Related to Our Management Structure We depend upon key personnel of KL, and if KL cannot recruit and retain key personnel for us, our business, financial condition and results of operations could be significantly impacted. We are an externally-managed company, and therefore we do not, and will not, have any internal management capacity and we do not have any employees. We depend to a significant degree on the diligence, skill and network of business contacts of the management team and other key personnel of KL, all of whom may be difficult to replace. KL is obligated to supply us with substantially all of our senior management team, including all of the members of our management team that are named in this Form 10-K. We expect that KL will evaluate, negotiate, structure, close and monitor our Real Estate Portfolio in accordance with the terms of the Management Agreement and provide the Recycled Capital HOPP’R to Lennar pursuant to the Lennar Agreements and any of our Other Customers pursuant to any future HOPP’R agreements we may enter into with such Other Customers. As detailed in the Management Agreement with KL, as our Manager, subject to business acquisition, investment, leverage and other guidelines or policies adopted by our Board, KL has significant discretion regarding the implementation of our business and operating policies and strategies. Accordingly, we believe that our success depends significantly upon the experience, skill, resources, relationships and contacts of the senior officers and key personnel of KL. In particular, our success depends to a significant degree upon the contributions of our officers, all of whom are currently senior officers of KL. We do not have employment agreements with any of these key personnel and do not have key person life insurance on any of them. None of these key personnel are required by any agreement to dedicate a specified allocation of their time to Millrose. If any of our officers were to cease their affiliation with us or KL, KL may be unable to find suitable replacements, and our operating results could suffer. We believe that our future success will depend, in large part, upon KL’s ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for highly skilled personnel is intense, and KL may be unsuccessful in attracting and retaining such skilled personnel. If we lose or are unable to obtain the services of highly skilled personnel, our ability to implement our business strategies could be delayed or hindered, and there could be a material adverse effect on our business, financial condition and results of operations. We also depend upon the senior professionals of KL to maintain relationships with sources of potential business opportunities, and we rely upon these relationships to provide us with potential business opportunities. We cannot assure you that these individuals will remain employed by KL and continue to provide indirect business advice to us. KL is under no obligation to bring potential new business opportunities or contacts to us. If these individuals, including the members of the management team of KL, do not maintain their existing relationships with KL, maintain existing relationships or develop new relationships with other sources of business opportunities, we may not be able to successfully finance the acquisition and development of land assets or grow our portfolio in future, should we choose to expand. We are reliant on KL and their management team to maintain our existing relationships with Lennar, including pursuant to the ongoing obligations under the Lennar Agreements and the agreements that we expect to negotiate with other home builders. Kennedy Lewis and Lennar have a longtime business relationship with each other, and an adverse change in the relationship between Kennedy Lewis and Lennar could affect our relationship with Lennar because we are entirely managed by KL (which is an affiliate and wholly-owned subsidiary of Kennedy Lewis). Any such impact to our relationship with Lennar may have significant impacts to Millrose, since Lennar is our primary customer (by transaction size) and source of revenue. In addition, individuals with whom the senior professionals of KL have relationships will not necessarily provide us with business opportunities and as such, any business opportunities that are generated through those relationships will be subject to the Allocation Policy (see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement” for more information). Therefore, we can offer no assurance that such relationships will generate business opportunities for us. 69 Table of Contents KL can terminate the Management Agreement on 60 days’ notice under certain circumstances, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our business, financial condition and results of operations. The Management Agreement gives the Manager the right to terminate the Management Agreement effective upon 60 days’ prior written notice of termination to Millrose in the event that Millrose defaults in the performance of any material term, condition or covenant contained in the Management Agreement and such default continues for a period of 30 days after written notice thereof specifying such default (or 45 days after written notice of such breach if Millrose takes steps to cure such breach within 30 days of the written notice), whether we have found a replacement or not. If the Manager terminates the Management Agreement, we may not be able to find a new adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. In the event that we terminate the Management Agreement without cause, we would be obligated to pay a Termination Fee pursuant to the Management Agreement and may have difficulty finding a suitable replacement manager. Additionally, pursuant to Lennar’s Management Succession Consent Right included in the Founder’s Rights Agreement, if the Management Agreement is terminated for any reason (with or without cause), then Lennar will have a consent right over the appointment of a new manager, which may delay our ability to appoint a replacement manager. Lennar’s Management Succession Consent Right also gives Lennar a consent right over any management agreement that Millrose may enter into with a new or existing manager. If we are unable to appoint a replacement manager quickly, our operations are likely to experience a disruption and our financial condition, business and results of operations, as well as our ability to pay distributions, are likely to be adversely affected. In addition, the coordination of our management and business activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the experience possessed by KL. Even if we are able to retain comparable management, the integration of such management and its lack of familiarity with our business objectives may result in additional costs and time delays that may materially adversely affect our business, financial condition and results of operations. You have limited control over changes in our policies and operations, which increases the uncertainty and risks you face as a stockholder. Our Board has discretion to determine our major policies, including the policies and guidelines described herein, subject to any existing contractual obligations and limitations described herein. Our Board may amend or revise these and other policies without your vote. Our Board’s broad discretion in setting policies and your inability to exert control over those policies increases the uncertainty and risks you face as a stockholder. Further, our Board may be constrained by the terms of the Founder’s Rights Agreement between Millrose and Lennar, pursuant to which Lennar has an approval right over certain Board actions including appointment of a replacement manager pursuant to Lennar’s Management Succession Consent Right. Additionally, our Charter includes a number of protective governance provisions, which provide that certain actions require a vote of approval of the holders of our Class B common stock, voting separately as a class, in addition to the approval of the holders of our Class A common stock and our Class B common stock, voting together without regard to class. The Founder’s Rights Agreement terms and the protective governance provisions may limit your ability as a stockholder, particularly as a holder of Class A common stock, to exert influence over Millrose’s policies and operations. KL, as our Manager, is authorized to follow broad operating and business guidelines and, therefore, has discretion in identifying and managing the land assets that are appropriate investments for us, as well as our individual operating and business decisions. Our Board periodically reviews our operating and business guidelines and our operating activities and investments, but it does not review or approve each decision made by the Manager on our behalf. In addition, in conducting periodic reviews, our Board relies primarily on information provided to it by the Manager. Furthermore, transactions entered into by KL, as our Manager, may be costly, 70 Table of Contents difficult or impossible to unwind by the time they are reviewed by our Board. Our Manager has great latitude within the broad parameters of our business acquisition guidelines in determining the types and amounts of assets in which to acquire and invest on our behalf, including consummating transactions that may result in returns that are substantially below expectations or result in losses, which would materially and adversely affect our business, financial condition and results of operations. In the future, should our business evolve and should we enter into HOPP’R agreements with Other Customers, the Board may be subject to increased limitations resulting from new agreements or alternatively our Board may have increased flexibility in our business operations. We pay substantial fees to KL, which payments increase the risk that we may not earn a profit. There is also no guarantee that KL will be successful identifying and consummating new business opportunities with Other Customers, which also increases the risk that you will not earn any returns on your investment. Pursuant to the Management Agreement, we pay significant fees to KL, including the Management Fees. Those fees include advisory and administrative fees and obligations to reimburse KL in limited circumstances as described in the Management Agreement for certain expenses they incur in connection with providing services to us (not including fees incurred in connection with extraordinary litigation and mergers and acquisitions and other events outside Millrose’s ordinary course of business, including, in certain circumstances, costs associated with the ownership and maintenance of land). However, the payment of such fees to KL does not guarantee that KL is able to successfully manage our land assets and our existing business relationship with Lennar. We rely on KL, as our Manager, to identify and consummate new business opportunities for us. However, available capital for transactions with Other Customers and Lennar Related Ventures is subject to Lennar’s Capital Priority Right. There is no guarantee when or if (or to what extent) KL will be able to successfully identify and consummate appropriate and suitable business opportunities for us. KL may not be successful in identifying opportunities and new customers that meet our criteria. Additionally, Lennar’s extensive skillsets, knowledge, experience and expertise that will be applied to the benefit of Millrose Holdings with respect to Future Property Assets acquired pursuant to the Master Program Agreement is not available to us for any Future Property Assets acquired for Other Customers. We may not be able to consummate relationships with Other Customers on satisfactory terms or at all. There is also no guarantee that KL can successfully manage any new projects added to our portfolio in future. Our ability to make investments on favorable terms may be constrained by several factors including, but not limited to, the terms and restrictions of our agreements with Lennar or competition from traditional Land Banking providers with significant capital, including other publicly-traded REITs and institutional investment funds, which may significantly increase transaction costs, and/or the inability to finance a transaction on favorable terms or at all. The failure to identify or consummate acquisitions or future dispositions of land assets with Other Customers on satisfactory terms, or at all, may impede our growth and negatively affect our cash available for distribution to our stockholders. If we internalize our management functions, we could incur significant costs associated with being self-managed. Subject to the terms of the Management Agreement, in the future, our Board may consider internalizing the functions performed for us by KL, as our Manager. The method by which we could internalize these functions could take many forms. There is no assurance that internalizing our management functions will be beneficial to us and our stockholders. Any internalizing of management could result in a dilution of your interests as a stockholder and could reduce earnings per share and adversely affect our results of operations. Additionally, we may not realize the perceived benefits, we may not be able to properly integrate a new staff of managers and employees, and we may not be able to effectively replicate the services provided previously by KL or its affiliates. Internalization transactions have, in some cases, been the subject of litigation. Even if these claims are without merit, we could be forced to spend significant amounts of money defending claims that would reduce the amount of funds available for us to invest in land assets or other investments and to pay distributions. All of these factors could have a material adverse effect on our results of operations, financial condition and ability to pay distributions. 71 Table of Contents The termination of the Management Agreement with KL may require us to pay a substantial termination fee, including in the case of a termination for unsatisfactory performance, which may limit our ability to end our relationship with KL. The terms of the Management Agreement with KL automatically extend each year for an additional one-year period. We have the right to terminate the Management Agreement, as well as the Manager in certain circumstances, as described further under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” However, if we terminate the Management Agreement without cause, as defined in the Management Agreement, we will be obligated to pay KL the Termination Fee. These provisions substantially increase the cost to us of terminating the Management Agreement without cause, which may limit our ability to end our relationship with KL as the Manager. The payment of the Termination Fee could have a material adverse effect on our financial condition, including our ability to pay distributions to our stockholders. As such, if we terminate the Management Agreement other than for cause, we are obligated to pay KL the Termination Fee which can be substantial. For these reasons, the terms of the Management Agreement, including the Termination Fee may discourage us from replacing the Manager. Any adverse changes in the financial health of KL or its affiliates or our relationship with them could hinder our operating performance and the return on your investment. We are dependent on KL to manage our operations and acquire and manage our portfolio of land and other real estate assets. Under the direction of our Board, KL makes all decisions with respect to the management of our business operations and life as a public company. KL depends upon the fees and other compensation that it receives from us in connection with managing Millrose to conduct its own operations. Any adverse changes in the financial condition of KL or its affiliates, or our relationship with KL, could hinder its ability to successfully manage our operations and our portfolio of investments, which would adversely affect us and our stockholders. There are significant potential conflicts of interest that could affect our business returns. As a result of our arrangements with KL, there may be times when KL or its affiliates have interests that differ from those of our stockholders, giving rise to a conflict of interest. For example, there may be potential conflicts of interest if we need to compete for the time and services of personnel from KL that work for us and our subsidiaries, as none of our officers are required by any agreement to dedicate a specified allocation of their time to Millrose, or if the compensation payable by us to KL for their services may not be on market terms and may be payable whether or not our stockholders receive any distributions. KL is an affiliate and wholly-owned subsidiary of Kennedy Lewis. Kennedy Lewis has a long business relationship with Lennar and has existing Land Banking engagements with Lennar through other entities. Prior to the Spin-Off, Kennedy Lewis was acting as a strategic advisor to Lennar in the structuring of the Spin-Off, the formation of Millrose and Millrose Holdings, and the preparation of the various agreements and documentation related to the Spin-Off and Millrose’s relationship with Lennar following the Spin-Off, for which it received no payment. Kennedy Lewis has also been involved in negotiating with Lennar the terms of the Management Agreement, including the amount of the Management Fee. Although Kennedy Lewis was involved in such capacities as Lennar’s strategic advisor in connection with the Spin-Off, prior to the Spin-Off, Kennedy Lewis (either directly or through KL) was not acting in any capacity on Millrose’s behalf, including with respect to the negotiations of the Lennar Agreements with Lennar and the preparation of Millrose’s organizational documents and corporate policies. As such, in each case, Kennedy Lewis’ involvement and consultation was as a strategic advisor to Lennar regarding the Spin-Off, and not on behalf of Millrose. Given Kennedy Lewis’s relationship with Lennar, who initially is our primary and largest customer and our major primary customer for the foreseeable future, there may arise significant potential conflicts of interest if KL needs to renegotiate the terms of any Lennar Agreements with Lennar. 72 Table of Contents Further, KL’s team serves or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds managed by Kennedy Lewis or its affiliates. Similarly, Kennedy Lewis or its affiliates may have other customers with similar, different or competing business objectives. While KL does not intend to manage any other business or entity other than Millrose (including Millrose’s subsidiaries), Kennedy Lewis, an affiliate and parent company of KL, has other subsidiaries like KL that manage various other businesses, private funds and other entities, including those that also provide Land Banking in some capacity (including residential Land Banking). Kennedy Lewis’ fees for those services may exceed KL’s net income from acting as our Manager. In serving in these multiple capacities, Kennedy Lewis or its affiliates may have obligations to other customers or investors in those entities, the fulfillment of which may not be in the best interest of us or our stockholders. For example, the management team of KL has, and will continue to have, management responsibilities for investment funds, accounts or other investment vehicles managed or sponsored by Kennedy Lewis or its affiliates. Our business objectives may overlap with the business objectives of such affiliated investment funds, accounts or other investment vehicles. As a result, those individuals may face conflicts in the allocation of business opportunities among us and other investment funds or accounts advised by or affiliated with Kennedy Lewis. KL does directly manage any entities other than Millrose. However, Kennedy Lewis, an affiliate and the parent of KL, owns other subsidiaries that are substantially similar to KL and manage other companies, including potential competitors and companies maintaining REIT status, in the residential real estate industry, which are providing, or may provide, Land Banking. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager” for more information. We may seek business opportunities to provide the HOPP’R to Lennar Related Ventures and from Other Customers. In the event any of the HOPP’R arrangements with any Lennar Related Ventures and Other Customers requires us, or gives us the flexibility to, identify potential Future Property Assets for consideration to our customers, KL, as our Manager, is responsible for searching for and identifying such Future Property Assets and business opportunities on our behalf. These Future Property Assets and business opportunities may also represent strategic opportunities for other investment funds, accounts or investment vehicles that are advised by or affiliated with KL or Kennedy Lewis. In such cases, KL must allocate business opportunities among eligible accounts in a manner consistent with the Allocation Policy. However, we can offer no assurance that such opportunities are allocated to us fairly or equitably in the short-term or over time. Additionally, it is possible we could pursue strategic or financing transactions with affiliates of KL or with affiliates of KL acting as advisors. In the Management Agreement with KL, we acknowledge that KL may engage in other activities or businesses and act as the manager to any other person or entity (including REITs) even though such person or entity has business acquisition policies and objectives similar to our policies and objectives, and we are not entitled to preferential treatment in receiving information, recommendations and other services from KL. Because Lennar’s subsidiary (or any future owner of the HOPP’R Rights) may license the HOPP’R Rights to other land banks and other external managers that manage land banks, our business could suffer, as we might no longer be the only publicly traded entity using the HOPP’R. Our business relies on our ability to provide the HOPP’R, including the Recycled Capital HOPP’R, to our customers, and we may lose our competitive advantage against other land banks if other entities in the future also provide the HOPP’R to their customers. Accordingly, we may compete with and lose business opportunities to such other entities. We cannot be sure that our governance guidelines, or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us, as those that would have been obtained with an unrelated person. KL maintains a contractual as opposed to a fiduciary relationship with us. KL’s liability will be limited under the Management Agreement, and we have agreed to indemnify the Manager against certain liabilities. Under the Management Agreement, KL does not assume any responsibility to us other than to render the services called for under that agreement, and it is not responsible for any action of our Board in following or 73 Table of Contents declining to follow KL’s advice or recommendations as our Manager. Even though officers recommended by KL and appointed by our Board owe Millrose and its stockholders duties under Maryland law in their capacity as Millrose’s officers, which may include the duty to exercise reasonable care in the performance of such officers’ responsibilities, as well as the duties of loyalty, good faith and candid disclosure, KL as the Manager maintains a contractual as opposed to a fiduciary relationship with us. In addition, we have agreed to indemnify KL and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Management Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Management Agreement. These protections may lead KL to act in a riskier manner when acting on our behalf than it would when officer for its own account. We are party to transactions with related parties that may increase the risk of allegations of conflicts of interest. We are party to transactions with related parties, including Lennar and KL, which is an affiliate and wholly-owned subsidiary of Kennedy Lewis. Our agreements with related parties or in respect of transactions among related parties may not be on terms as favorable to us as they would have been if they had been negotiated among unrelated parties. Our stockholders or other related parties may challenge any such related party transactions. If any challenges to related party transactions were to be successful, we might not realize the benefits expected from the transactions being challenged. Moreover, any such challenge could result in substantial costs (and certain costs related to litigation would not be paid for by KL pursuant to the Management Agreement) and a diversion of management’s attention that could have a material adverse effect on our reputation, business and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or not the allegations have merit or are substantiated. KL faces conflicts of interest relating to the fee structure under the Management Agreement, which could result in actions that are not necessarily in the long-term best interest of our stockholders. Under the Management Agreement, because KL, as our Manager, is entitled to receive substantial compensation regardless of performance, based on the aggregate size of the Millrose Tangible Assets, KL’s interests are not wholly aligned with those of our stockholders. In that regard, KL could be motivated to recommend riskier or more speculative investments, including significant acquisition of additional land assets, that would entitle KL to higher fees. For example, because the Management Fee payable to KL is based on our total land and other real estate assets, KL may have an incentive to use a high level of leverage or to acquire land assets on less than favorable terms in order to increase the total amount of land and other real estate assets under management. In addition, KL’s ability to receive higher fees and reimbursements depends on our continued investment in land assets and other real estate assets. Therefore, the interest KL has in receiving an increased Management Fee may conflict with the interest of our stockholders in earning returns on their investment in our common stock. KL and its officers and employees face competing demands relating to their time, and this may cause our operating results to suffer. KL and its officers and employees and their respective affiliates are key personnel, general partners, sponsors, managers, owners and advisers of other land and other real estate asset investment programs, including investment products sponsored by affiliates of Kennedy Lewis, some of which have business objectives and legal and financial obligations similar to ours and may have other business interests, as well. Additionally, Kennedy Lewis manages other entities that do Land Banking that could compete with us for opportunities and resources. In particular, our Chief Executive Officer and President is a Managing Partner of Kennedy Lewis and a member of the investment committee of funds advised by Kennedy Lewis. While our Chief Executive Officer is expected to devote a substantial amount of time to Millrose, there is no requirement for our Chief Executive Officer to 74 Table of Contents dedicate a specific amount of time to Millrose. Our Chief Financial Officer is a full-time employee of Kennedy Lewis. While it is currently expected that our Chief Financial Officer does not have any other roles at Kennedy Lewis while working as our Chief Financial Officer, there is no requirement for our Chief Financial Officer to be fully dedicated to Millrose at all times. Because these persons have competing demands on their time and resources and are not required under the Management Agreement to dedicate any specified allocation of time to Millrose, they may have conflicts of interest in allocating their time between our business and these other activities. If this occurs, the returns on our investments may suffer. We may be at an increased risk for dissident stockholder activities due to perceived conflicts of interest arising from our external management structure and relationships. Companies with external management may more often be the target of dissident stockholder proposals and stockholder litigation alleging conflicts of interest in their business dealings. The various relationships noted above may precipitate such activities. Certain proxy advisory firms which have significant influence over the voting by stockholders of public companies in the future may recommend that stockholders withhold votes for the election of our incumbent directors, vote against our say on pay vote or other management proposals or vote for stockholder proposals that we oppose. These recommendations by proxy advisory firms in the future might affect the outcome of future director elections to our Board and votes on our say on pay or other stockholder votes, which may increase stockholder activism and litigation. These activities, if instituted against us, could result in substantial costs and diversion of management’s attention and could have a material adverse impact on our reputation and business. General Risk Factors Our business, financial condition and results of operations could suffer in the event of system failures or cybersecurity attacks. We rely on KL, as our Manager, for all of our internal technology systems and cybersecurity procedures and oversight. As a newly-formed corporation with no prior business operations, we will be implementing and testing our security measures and a disaster recovery plan for our internal and hosted information technology systems. Our systems may be vulnerable to damages from any number of sources, including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cybersecurity attacks, such as malware, ransomware, or unauthorized access. Any system failure or accident that causes interruptions in our operations or the operations of the Manager could result in a material disruption to our business. We may incur additional costs to remedy damages caused by such disruptions. Third-party security events at our Manager or any service providers could also impact our data and operations via unauthorized access to information or disruption of services which may ultimately result in losses. Despite having training, detection systems and response procedures, an increase in cyber-attacks may create disruption to our business, financial condition and results of operations, as well as exacerbate our reputational risk. We are also depending on the relevant training, detection systems and response procedures delivered by KL to its employees. In addition, KL does not have any experience with managing a public company where public scrutiny and cyber-attacks might be more frequent. The growing frequency and sophistication of cyberattacks across the market may lead to increased costs to protect our infrastructure and respond to any events, including additional personnel, consultants and protection technologies. Any compromise of our security or KL’s security could result in a violation of applicable privacy and other laws, unauthorized access to information of ours and others, significant legal and financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our security measures, which could harm our business. Additionally, remediation costs for security events may not be covered by our insurance. In addition, any material cyberattacks will require us to publicly disclose such material cyberattacks in accordance with SEC rules. 75 Table of Contents ESG initiatives, requirements and market expectations may impose additional costs and expose us and our customers to new risks. There is an increasing focus from regulators, investors, and certain of our and our customers’ stakeholders concerning corporate sustainability, particularly as our business centers around land assets. For example, California recently enacted a climate focused disclosure law, and the SEC adopted (and as of the date of this Form 10-K paused the implementation of) climate disclosure regulations, both of which may require us to focus significant time and resources on behalf of ourselves and our customers to comply with these new requirements, and we may incur significant costs in compliance with such rules. Some investors may use ESG factors to guide their investment strategies and, in some cases, may choose not to invest in us, or otherwise do business with us, if they believe our or our customers’ policies relating to corporate responsibility are inadequate. Third party providers of corporate responsibility ratings and reports on companies have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by which companies’ corporate responsibility practices are assessed are evolving, which could result in greater expectations of us and our customers and cause us and our customers to undertake costly initiatives to satisfy such new criteria. Alternatively, if we or our customers, including Lennar, elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our or our customers’ policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our or our customers’ corporate responsibility procedures or standards do not meet the goals or the standards set by various constituencies. If we and our customers fail to comply with ESG related regulations and to satisfy the expectations of investors and our customers’ stakeholders, or our or our customers’ announced goals and other initiatives are not executed as planned, our reputation could be adversely affected, and our business, financial condition or results of operations, and our ability to grow our business, may be negatively impacted. In addition, we may incur significant costs in attempting to comply with regulatory requirements, ESG policies or third-party expectations or demands and we may not be successful in effectively complying with regulatory requirements, ESG policies or third-party expectations. We may also receive pushback from other stakeholders regarding any initiatives related to ESG matters. For example, in January 2025, President Trump signed a number of executive orders focused on diversity, equity and inclusion matters, which indicate continued scrutiny of such initiatives and may implicate the initiatives of non-governmental entities, including publicly traded companies. If we do not successfully manage expectations across varied stakeholder interests or we experience conflicts between actual or proposed governmental regulations and stakeholder expectations, it could erode stakeholder trust or impact our reputation, and our financial results may suffer. In addition, even if we are effective at addressing such concerns, we may experience increased costs as a result of balancing competing interests related to ESG matters and executing upon any ESG goals, which costs may not be offset by any benefit to our reputation, and which could have an adverse impact on our business and financial condition. Artificial intelligence (“AI”) and other machine learning techniques could increase competitive, operational, legal and regulatory risks to our business in ways that we cannot predict. The use of AI by us and others, and the overall adoption of AI throughout society, may exacerbate or create new and unpredictable competitive, operational, legal and regulatory risks to our business. There is substantial uncertainty about the extent to which AI will result in dramatic changes throughout the world, and we may not be able to anticipate, prevent, mitigate or remediate all of the potential risks, challenges or impacts of such changes. These changes could potentially disrupt, among other things, our business model, investment strategies and operational processes. Some of our competitors may be more successful than us in the development and implementation of new technologies, including services and platforms based on AI, to improve their operations. If we are unable to adequately advance our capabilities in these areas or do so at a slower pace than others in our industry, we may be at a competitive disadvantage. 76 Table of Contents If the data we, or third parties whose services we rely on, use in connection with the possible development or deployment of AI is incomplete, inadequate or biased in some way, the performance of our business could suffer. In addition, recent technological advances in AI both present opportunities and pose risks to us. Data in technology that uses AI may contain a degree of inaccuracy and error, which could result in flawed algorithms in various models used in our business. The volume and reliance on data and algorithms also make AI more susceptible to cybersecurity threats, including data poisoning and the compromise of underlying models, training data or other intellectual property. Our personnel or the personnel of our service providers could, without being known to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities. This could reduce the effectiveness of AI technologies and adversely impact us and our operations to the extent that we rely on the AI’s work product. There is also a risk that AI may be misused or misappropriated by third parties we engage. For example, a user may input confidential information, including material non-public information or personally identifiable information, into AI applications, resulting in the information becoming a part of a dataset that is accessible by third-party technology applications and users, including our competitors. Further, we may not be able to control how third-party AI that we choose to use is developed or maintained, or how data we input is used or disclosed. The misuse or misappropriation of our data could have an adverse impact on our reputation and could subject us to legal and regulatory investigations or actions or create competitive risk. In addition, the use of AI by us or others may require compliance with legal or regulatory frameworks that are not fully developed or tested, and we may face litigation and regulatory actions related to our use of AI. There has been increased scrutiny, including from global regulators, regarding the use of “big data,” diligence of data sets and oversight of data vendors. Our ability to use data to gain insights into and manage our business may be limited in the future by regulatory scrutiny and legal developments. Global economic and political instability, geopolitical conflicts, and changes in U.S. trade policies, including tariffs, could adversely affect our business, financial condition, or results of operations. Our business could be adversely affected by unstable economic and political conditions within the U.S. and foreign jurisdictions, geopolitical conflicts, and changes in trade policies. For example, the ongoing conflict between Russia and Ukraine, conflicts in the Middle East, and uncertainty regarding future trade relations between the U.S. and key trading partners could disrupt global supply chains, increase material costs, and contribute to inflationary pressures. While we do not have direct customer or supplier relationships in these regions, sanctions, export controls, cyberattacks, and disruptions to energy markets could indirectly impact our business and the cost of goods necessary for development of Homesites and related construction. In addition, recent tariffs imposed or threatened by President Trump on imported goods, including construction materials and other critical supplies, could increase our costs and reduce availability of necessary materials. These tariffs, as well as potential retaliatory measures by other countries, may further impact global trade flows, exacerbate inflation, and contribute to higher interest rates or general economic uncertainty. Such factors could negatively impact our business partners, employees, and customers or otherwise adversely affect our financial condition and results of operations. Risks Related to Our Governance Structure Our dual-class capital structure may adversely affect the market price of our Class A common stock and in turn the value of our Class B common stock. Pursuant to our Charter, we have two classes of common stock: Class A common stock and Class B common stock. Our Class A common stock is listed on NYSE and publicly traded under the symbol “MRP”. We have no intention of listing our Class B common stock at this or any other time. Our Class B common stock has ten votes for each share of Class B common stock held in the holder’s name, except when voting together with 77 Table of Contents the holders of the Class A common stock, each holder of record of Class B common stock is entitled to the greater of (i) ten votes per share and (ii) that number of votes per share of Class B common stock that would entitle the outstanding shares of Class B common stock to cast, in the aggregate, 35% of the votes entitled to be cast on the matter, whereas our Class A common stock has one vote per share. Subject to the provisions of the Charter, with respect to all matters upon which stockholders are entitled to vote, the holders of the outstanding shares of Class A common stock and the holders of the outstanding shares of Class B common stock will vote together without regard to class (other than as to the number of votes per share). Notwithstanding the foregoing, so long as there are any shares of Class B common stock outstanding, any amendment to the Charter (except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Charter) must be approved by the affirmative vote of the holders of two-thirds in voting power of the Class A common stock and Class B common stock, voting together without regard to class. Once there are no longer any shares of Class B common stock outstanding, the Charter may be amended only if the amendment is approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter. Additionally, any merger, consolidation, sale of all or substantially all of our assets or other business combination involving Millrose that is submitted for approval of the Millrose’s stockholders must be approved by both (i) a majority of the voting power of the votes entitled to be cast by all stockholders of Class A common stock and Class B common stock, voting together without regard to class, and (ii) a majority of the total outstanding votes entitled to be cast by all stockholders of Class B common stock, voting as a separate class. In addition, so long as any shares of Class B common stock are outstanding, Millrose shall not, without the affirmative vote of at least two-thirds of the shares of Class B common stock outstanding, voting separately as a class, issue additional shares of Class B common stock (other than in connection with dividends or other distributions paid with shares of Class B common stock solely to holders of Class B common stock). As a result, holders of our Class B common stock (which is currently held almost entirely by the Miller Family, as discussed below) have the ability to prevent the Company from taking actions that may be viewed negatively by the Miller Family but might otherwise be viewed by other stakeholders as in the interests of the Company and our stockholders. As a result, the holders of our Class B common stock may have the ability to control the outcome of certain matters requiring stockholder approval for the foreseeable future, including the election of directors, even if their stock holdings represent less than a majority of the outstanding shares of our common stock. This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests. This influence may adversely affect the market price of our Class A common stock and in turn the value of our Class B common stock. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. A significant portion of the voting power of our common stock is held by the Miller Family (taking into account the voting power allocable to the Millrose stock that Lennar retained in the form of Class A common stock, even though Lennar has agreed not to vote that stock), whose interests may differ from or conflict with the interests of our other stockholders. Our Class B common stock will convert automatically into Class A common stock, on a one-for-one basis, upon the approval of the conversion, in whole, but not in part, of all shares of Class B common stock, then outstanding by the holders of a majority of the outstanding shares of Class B common stock. If that occurs, Millrose will no longer be authorized to issue Class B common stock. Individual shares of Class B common stock cannot be converted into Class A common stock. In addition, while we do not currently expect to issue any additional shares of Class B common stock, and any such issuance requires the approval of the holders of the Class B common stock, any future issuances of Class B common stock would be dilutive to both holders of our Class A common stock and Class B common stock. Such issuances would also reduce the voting power of our Class A common stock as compared to our Class B common stock and could further concentrate the voting power of holders of our Class B common stock relative to holders of our Class A common stock. Additionally, so long as there are any shares of Class B common stock outstanding, and notwithstanding any future issuances of Class A common stock, holders of 78 Table of Contents Class A common stock will not be entitled to cast more than 65% of the votes entitled to be cast by the holders of common stock and any other classes or series of stock entitled to vote with the common stock. Holders of Class B common stock may be entitled to cast more than 35%, and holders of Class A common stock may be entitled to cast less than 65%, of the votes entitled to be cast by the holders of common stock and any other classes or series of stock entitled to vote with the common stock, if the number of outstanding shares of Class B common stock multiplied by 10 (the “Class B Initial Vote”) is greater than 35% of the number of outstanding shares of Class A common stock plus the Class B Initial Vote. It is possible that our dual-class structure, combined with the concentrated influence of our Class B common stock holders, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences. Some investors may not invest in our Class A common stock as a result of our dual-class capital structure and our overall governance profile, which may adversely affect the trading price of our Class A common stock. Certain index providers have announced restrictions on including companies with multiple share class structures in certain of their indices. For example, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Under the announced policies, our dual-class capital structure makes us ineligible for inclusion in any of these indices. Although S&P Dow Jones, a provider of widely followed stock indices, reversed its prior decision to exclude companies with multiple share classes, such as ours, in certain of their indices, and we have been included in the S&P SmallCap 600, there is no guarantee that our Class A common stock will be included in any additional Standard and Poor’s index, despite their eligibility. The Council of Institutional Investors remains strongly opposed to dual-class structures and some investors may continue to avoid investing in companies with dual-class structures like ours. In addition, several stockholder advisory firms oppose the use of multiple class structures. As a result, our Class A common stock may not be included in certain stock indices and may cause stockholder advisory firms to publish negative commentary and recommendations about our corporate governance practices (including recommendations that stockholders vote against re-election of directors) or otherwise seek to cause us to change our capital structure. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. Additionally, any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock and in turn the value of our Class B common stock. As a result, the market price of our Class A common stock, and in turn the value of our Class B common stock, could be adversely affected. Lennar, as the original parent company of Millrose and the initial contributor of the Business Assets to Millrose, has certain Founder’s Rights, which are exclusive to Lennar. These rights, pursuant to the Founder’s Rights Agreement, include the Management Succession Consent Right, the Effective Equity Price Protection Right, the Enforcement Rights, the Applicable Rate Adjustment Right, the Capital Priority Right, the Secured Financing Collateral Consent Right, and the Pause Period Designation Right, among others (see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement” for a full description of the Founder’s Rights). The Founder’s Rights granted to Lennar could deter potential Other Customers from doing business with us and could deter potential investors, which could adversely affect the value of our Class A common stock and in turn the value of our Class B common stock. 79 Table of Contents The Miller Family, members of which are substantial stockholders of Lennar, has substantial voting power with regard to us, and may be able to cause us to do things that are favorable to Lennar. The Miller Family has approximately 43% voting power (not taking into account the voting power allocable to the Millrose stock that Lennar retained in the form of Class A common stock). While Millrose’s Class A common stock is listed on the NYSE, Millrose’s Class B common stock is not listed on any securities exchange or quoted on any quotation system. Shares of our Class B common stock are highly illiquid and for most investors appropriate only as a long-term investment, and therefore investors may need to hold Class B common stock indefinitely. As such, a potentially significant amount of voting power over our common stock is held by the Miller Family, whose interests may differ from or conflict with the interests of our other stockholders. The Miller Family has the ability to influence our affairs and may have the ability to exercise control over them, including the election and removal of directors and other matters submitted to our stockholders for approval, amendments to our Charter and our Bylaws, and significant transactions, if they are presented to our stockholders for approval. As long as the Miller Family has a majority voting power of our common stock, the Miller Family will also have the power to impede or cause a change in control, which could, among other things, discourage a potential acquirer from attempting to obtain control of us in a manner that provides a control premium to any stockholders other than the Miller Family. Moreover, in such a change of control, stockholders are not entitled to dissenters’ rights of appraisal under our Charter or applicable Maryland law unless our Board determines that such rights apply. In addition to its majority voting power of our common stock, the Miller Family is to exert significant influence on our affairs, including everything described above, by virtue of their relationship with Lennar and Lennar’s relationship with Kennedy Lewis. Given Mr. Miller’s role as Executive Chairman and Co-Chief Executive Officer of Lennar, it is possible that the Miller Family’s interests may, in some circumstances, conflict with the interests of our other stockholders. In addition, because of our dual-class structure, the Miller Family may exert significant influence on the election of our Board and may be able to elect the members of our Board. Pursuant to our Charter, any merger, consolidation, sale of all or substantially all of our assets and other business combinations involving Millrose that is submitted for approval of the Millrose stockholders require a majority vote of Class A common stock holders and Class B common stock holders, voting together without regard to class, and majority vote of Class B common stock holders, voting as a separate class. Given that the Class B common stock is held almost entirely by the Miller Family, the Miller Family may have significant influence over such matters. This concentrated control limits the ability of other stockholders to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial, which could adversely affect the market price of our Class A common stock and in turn the value of our Class B common stock. Various conflicts of interest between Lennar, the Miller Family and us could arise. Certain of our directors, even if independent, may also own stock in Lennar, and such ownership could create or appear to create potential conflicts of interest when those directors are faced with decisions that could have different implications for Lennar and us (including Millrose Holdings). Potential conflicts of interest could also arise if we enter into any new commercial arrangements with Lennar or with Mr. Miller. Millrose and Millrose Holdings entered into various agreements to govern our relationship with Lennar, including the Master Program Agreement, Master Option Agreement, Founder’s Rights Agreement and others described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar.” The agreements between Lennar, Millrose and Millrose Holdings were not based on arm’s-length negotiations and were not approved by any of our independent directors as these were executed prior to the date of the Spin-Off. In addition, Mr. Miller had significant influence in structuring the Spin-Off, along with his affiliates. It is possible that we could have negotiated more favorable terms of the Lennar Agreements if we had engaged in arm’s length negotiations with Lennar. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar.” 80 Table of Contents Our rights and the rights of our stockholders to recover claims against our directors and officers are limited, which could reduce your and our recovery against them if they cause us to incur losses. Maryland law provides that directors have no liability in their capacity as directors if they perform their duties in good faith, in a manner they reasonably believe to be in Millrose’s best interest and with the care that an ordinarily prudent person in a like position would use under similar circumstances. As permitted by the MGCL, our Charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated. In addition, our Charter authorizes us, and our Bylaws require us, to indemnify our directors and officers and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding for losses they may incur by reason of their service in those capacities unless their act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, they actually received an improper personal benefit in money, property or services or, in the case of any criminal proceeding, they had reasonable cause to believe the act or omission was unlawful. We entered into indemnification agreements with the directors and officers that are described herein. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. Accordingly, in the event that actions taken by any of our directors or officers are immune or exculpated from, or indemnified against, liability but which impede our performance, our stockholders’ ability to recover damages from that director or officer will be limited. Any indemnification of our officers will also be subject to, and handled in accordance with, the Management Agreement and any ancillary agreements with KL. We may not have sufficient funds to satisfy indemnification claims of our officers and directors. Our Bylaws include indemnification protections for our officers and directors and we entered into indemnification agreements with the officers and directors that are described herein. Accordingly, any indemnification provided will be able to be satisfied by us only if we have sufficient funds. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their duties. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers or directors pursuant to these indemnification provisions. Any indemnification of our officers will also be subject to, and handled in accordance with, the Management Agreement and any ancillary agreements with KL. Our Charter and Bylaws, along with applicable provisions of Maryland law, include certain anti-takeover defense measure provisions that may make a merger, tender offer or proxy context difficult, which could depress the market price of our Class A common stock and in turn the value of our Class B common stock. In addition to any applicable anti-takeover defense measure provisions afforded under Maryland law, our Charter and Bylaws include certain provisions that may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination or an acquisition of Millrose, including provisions that: • authorize our dual-class capital structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of certain matters requiring stockholder approval, even if they own less than a majority of our outstanding shares of common stock; • for so long as there are any shares of Class B common stock outstanding, require a supermajority vote of the holders of our common stock, voting together without regard to class, to amend our Charter; 81 Table of Contents • provide that vacancies on the Board be filled only by a majority of the directors then serving, even though less than a quorum and whether or not resulting from an increase in the size of the Board, and not by stockholders; • permit the removal of a director or the entire Board only by the affirmative vote of two-thirds of the holders of the votes entitled to be cast in the election of directors; • prohibit cumulative voting; • permit amendments to the Charter, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series we have authority to issue; • permit issuances of authorized but unissued common stock without stockholder approval (other than, except for distributions of Class B common stock to holders of Class B common stock, additional issuances of Class B common stock); • authorize undesignated, or “blank check,” preferred stock, which may contain voting, liquidation, dividend and other rights senior to our common stock and shares of which may be issued without the approval of the holders of our common stock; • establish advance notice procedures for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting or special meeting of stockholders; and • specify that only our Board, the chair of our Board, our chief executive officer or president or, upon the written request of stockholders entitled to cast not less than a majority of the votes entitled to be cast, our secretary can call special meetings of our stockholders. In addition, Lennar has a Management Succession Consent Right. However, there is no guarantee that we will not have a change in control at some point in the future. Lennar’s rights pursuant to the Founder’s Rights Agreement (as described under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Lennar—Founder’s Rights Agreement”) may allow Lennar to influence certain corporate matters and increase the risk that Lennar could use the consent right to hinder or delay Millrose’s ability to carry out its intended business and strategy. As such, the Lennar’s Founder’s Rights may deter other customers from wanting to engage in doing business with Millrose, and could also increase the risk of concern and uncertainty for potential investors, which could depress the market price of our Class A common stock and in turn the value of our Class B common stock. Maryland law may limit the ability of a third party to acquire control of us. The MGCL provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholder rights plan, (c) make a determination under the Maryland Business Combination Act, or (d) act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under the MGCL, the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. The MGCL also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under the MGCL. The MGCL also provides that, unless exempted, certain Maryland corporations may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, certain issuances of shares of stock 82 Table of Contents and other specified transactions with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding stock of the Maryland corporation, unless the stock had been obtained in a transaction approved by its board of directors. The statute permits various exemptions from its provisions, including business combinations that are exempted by our Board prior to the time the interested stockholder becomes an interested stockholder. Our Board has adopted a resolution exempting any business combination involving us and any person from the provisions of this law, provided that such business combination is first approved by our Board, including a majority of directors who are not affiliates or associates of such person. The MGCL also provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of stockholders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares of stock owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares of stock entitled to vote on the matter. Control shares are generally voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within certain ranges of voting power, commencing at one-tenth or more of all voting power. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions. The control share acquisition statute does not apply to (1) shares of stock acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (2) acquisitions approved or exempted by the charter or bylaws of the corporation. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions of shares of our stock by the Millers and Vanguard. These and other provisions of the MGCL could have the effect of delaying, deferring or preventing a proxy contest, tender offer, merger or other change in control, which may have a material adverse effect on our business, financial condition and results of operations. Such restrictions under Maryland law are in addition to any restrictions and limitations relating to compliance with our REIT status or Millrose Holdings’ compliance with its own status requirements. On the other hand, none of these provisions can guarantee that we will not have a change in control at some point in the future and, as discussed above, we could experience significant adverse effects to our business, financial condition and results of operations, as well as our ability to maintain operations if we do experience a change in control event and Lennar exercises its “poison pill” right. Our Bylaws designate any state court of competent jurisdiction within the State of Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other agents. Our Bylaws currently provide that unless we consent in writing to the selection of an alternative forum, only a state court of competent jurisdiction within the State of Maryland, or, if such state courts do not have jurisdiction, the United States District Court located within the State of Maryland, will be the sole and exclusive forum for: (1) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, and any action or proceeding asserting any Internal Corporate Claim, including without limitation: (i) any derivative action or proceeding brought on behalf of Millrose, other than any action arising under federal securities laws, (ii) any claim, or action or proceeding asserting a claim, based on an alleged breach of any duty owed by any director or officer or other employee of Millrose to Millrose or to the stockholders of Millrose, or (iii) any claim, or any action or proceeding, asserting a claim, against Millrose or any director or officer or other employee of Millrose arising under or pursuant to any provision of the MGCL or our Charter or our Bylaws, or (2) any action or proceeding asserting a claim against Millrose or any director or officer or other employee of 83 Table of Contents Millrose that is governed by the internal affairs doctrine of Maryland law. The exclusive forum provision of our Bylaws does not apply to any action for which a court sitting in the State of Maryland does not have jurisdiction. The exclusive forum provision of our Bylaws does not establish exclusive jurisdiction in the courts of Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares of common stock shall be deemed to have notice of and to have consented to these provisions of our Bylaws, as they may be amended from time to time. Risks Related to Legal, Regulatory, Tax and Accounting Compliance We might fail to qualify or remain qualified as a REIT. We intend to qualify as a REIT under the Code and believe we will qualify as a REIT. However, REIT status is dependent on compliance with complex tax rules that are subject to change and differing interpretation. Moreover, our Charter provides our Board with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the approval of our stockholders. If we lose our status as a REIT, we will face serious income tax consequences that could substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because: • Millrose would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • Millrose would be subject to increased state and local taxes; and • unless Millrose is entitled to relief under statutory provisions, it could not elect to be subject to tax as a REIT for four taxable years following the year during which it was disqualified. Because REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and, if we do, our earnings will be reduced by the amount of U.S. federal and other income taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we do not qualify as a REIT, we will not be required to make distributions to stockholders, because a non-REIT is not required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. In addition, if we fail to qualify as a REIT, all distributions to stockholders will continue to be treated as dividends to the extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally applicable to long-term capital gains with respect to distributions. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement our business strategy and could adversely affect the value of our common stock. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we will qualify as a REIT beginning with our first taxable year ending December 31, 2025, we cannot assure you that we will remain qualified as a REIT for U.S. federal income tax purposes. Additionally, because we have no employees or management of our own and all our operations are run by our Manager and the employees that our Manager appoints for us, our ability to qualify for and maintain REIT status is entirely dependent on our Manager to ensure that we operate in ways that are fully compliant with all applicable REIT Requirements. The employees that our Manager assigns to us may not have extensive experience with managing a REIT or maintaining REIT status for any companies it manages, and our Board has limited recourse (including certain indemnities, limitations on activities, and termination) against KL under the Management Agreement if KL fails to ensure that we follow all applicable requirements to qualify for or maintain our status as a REIT following the Spin-Off. For a more detailed discussion of KL’s duties as our 84 Table of Contents Manager and our recourse under the Management Agreement, see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with our Manager—Management Agreement.” Complying with REIT Requirements may require us to forgo otherwise attractive investments or to dispose of otherwise attractive investments. To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of our capital stock. In order to meet these tests, we may be required to forgo investments we might otherwise make. Thus, compliance with the REIT Requirements may hinder our performance. In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including any mortgage loans. The remainder of our investment in securities (other than government securities, securities of Millrose Holdings and any other TRSs, and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of Millrose Holdings and other TRSs, and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments from our portfolio. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders. Even though we intend to qualify as a REIT, we will face tax liabilities that could reduce our cash flows. Even though we intend to qualify for taxation as a REIT, all our land acquisition and development activities will be conducted through one or more TRSs. Millrose Holdings and any other TRSs that we form in the future will be subject to U.S. federal income tax at regular corporate rates, as well as state, and local income taxes. Also, we may be subject to certain U.S. federal, state, and local taxes, or non-U.S. taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property, and transfer taxes. For example, if Millrose fails to satisfy the 75% gross income test, and yet has maintained its qualification as a REIT because certain other requirements have been met, we may be subject to a 100% tax on the net income attributable to the product of (i) the amount of gross income by which it fails the 75% gross income test and (ii) a fraction intended to reflect Millrose’s profitability. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We may also decide to retain capital gains we earn from the sale or other disposition of our property and pay income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, our stockholders that are tax-exempt entities, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability. State, local, and non-U.S. income tax laws may differ substantially from the corresponding U.S. federal income tax laws. Any of these taxes would decrease cash available for distributions to stockholders. Our stockholders are urged to consult their tax advisors regarding the effect of U.S. federal, state, local and non-U.S. tax laws on ownership of our common stock. Our organizational structure, including our ownership of interests in Millrose Holdings and other TRSs in the future, raises certain tax risks. Our current organizational structure consists of a parent company (Millrose), which wholly owns Millrose Holdings, a TRS. Millrose Holdings, in turn, owns, either directly or through intervening subsidiaries, the Property LLCs where all of our land assets are held. 85 Table of Contents A TRS is an entity classified as a corporation for U.S. federal income tax purposes in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS. A TRS also includes any corporation other than a REIT with respect to which a TRS owns securities possessing more than 35% of the total voting power or value of the outstanding securities of such corporation. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business. A TRS is subject to income tax as a regular corporation. We and Millrose Holdings will jointly elect for Millrose Holdings to be a TRS and may form or acquire additional TRSs in the future. Millrose Holdings is, and any TRS we form or acquire in the future will be, subject to corporate income tax at the U.S. federal, state, and local levels (including on taxable income attributable to land acquisition and development activities). These tax liabilities, if material, would diminish the amount of income earned through a TRS that would be distributable to Millrose and ultimately to our stockholders. U.S. federal, state and local corporate income tax rates may be increased in the future, and any such increase would further reduce the amount available for distribution by us to our stockholders from income earned through a TRS after the effective date of any increase in such tax rates. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. As a REIT, no more than 25% of our gross income with respect to any year may, in general, be from sources other than certain real estate-related assets. Dividends paid to us from Millrose Holdings or any other TRSs will be considered non-real estate income. We expect the interest income from the Promissory Note between Millrose and Millrose Holdings will be qualifying REIT income, and we will be relying on this income to help us qualify for and maintain Millrose’s REIT status. Therefore, we may fail to qualify as a REIT if the dividends from all of our TRSs, when aggregated with all other non-real estate income with respect to any one year, are more than 25% of our gross income with respect to such year. To continue qualifying as a REIT, we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our business objectives and reduce your overall return. In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not necessarily equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. We will be subject to U.S. federal income tax on any undistributed REIT taxable income or net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (i) 85% of our ordinary income, (ii) 95% of our capital gain net income and (iii) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on our land acquisition and development business or other investment opportunities, and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions. Certain types of assets generate substantial mismatches between REIT taxable income and available cash. As a result, the requirement to distribute a substantial portion of our REIT taxable income could cause us to: (i) sell assets in adverse market conditions; (ii) offer Lennar reductions in the price of exercising its options in order to induce it to accelerate exercise, (iii) raise capital on unfavorable terms; or (iv) distribute amounts that would otherwise be invested in future acquisitions or repayment of debt, in order to comply with REIT Requirements. To the extent that we are required to sell assets in adverse market conditions or raise capital on unfavorable terms, we could be materially and adversely affected. Further, amounts distributed will not be available to fund our operations or further our business objectives. Under certain circumstances, covenants and restrictions imposed by debt facilities may prevent us from making distributions that we deem necessary to comply with REIT Requirements. It is possible that we might not always be able to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes on our earnings while we qualify as a REIT. Furthermore, our inability to make required distributions could threaten our status as a REIT and could 86 Table of Contents result in material adverse tax consequences for us and our stockholders. Alternatively, we may make taxable in-kind distributions of our own stock, which may result in our stockholders paying income taxes with respect to such distributions in excess of any cash they receive or cause us to be required to withhold taxes with respect to such distributions in excess of any cash our stockholders receive. Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends. Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts, or estates is generally subject to tax at reduced rates. Currently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts or estates is 20%. Dividends payable by a REIT, however, generally are not eligible for this reduced rate, except to the extent that the REIT’s dividends are attributable to qualified dividends received by the REIT and such REIT designates that portion of its dividends as qualified dividends. Distributions from REITs that are treated as dividends but are not designated as qualified dividends or capital gain dividends are treated as ordinary income. Under currently applicable tax law, for taxable years beginning before January 1, 2026, distributions from REITs that are treated as dividends but are not designated as qualified dividends or capital gain dividends are taxed as ordinary income after the deduction under section 199A of the Code for 20% of the amount of the dividend in the case of certain U.S. non-corporate stockholders. To qualify for this deduction, the U.S. stockholder receiving such dividends must hold the dividend-paying REIT stock for at least 46 days taking into account certain special holding period rules) of the 91-day period beginning 45 days before the stock becomes ex-dividend and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to qualified dividends could cause investors who are individuals, trusts or estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. In addition, certain U.S. stockholders may be subject to a 3.8% Medicare tax on dividends payable by REITs. Tax rates applicable to our dividends could be changed in future legislation. The stock ownership restrictions of the Code for REITs and the stock ownership limits in our Charter may inhibit market activity in shares of our stock and restrict our business combination opportunities. Our Charter restricts the acquisition and ownership of shares of our stock above certain thresholds in order to preserve our status as a REIT. Among other limitations on ownership and transfer of shares of our stock, our Charter restricts, with certain exceptions, any person or entity from owning, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 9%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or 9% in value of the outstanding shares of all classes or series of our stock. A person holding less than 9% of our total outstanding capital stock or common stock may become subject to our Charter restrictions if repurchases by us cause such person’s holdings to exceed 9% of our total outstanding capital stock or common stock. Our Charter provides for an Excepted Holder Limit for the Miller Family to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, up to 12.8% in the aggregate, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or the outstanding shares of all classes or series of our stock. Our Charter provides that shares of our capital stock acquired or held in excess of the ownership limits will automatically be transferred to a trust for the benefit of a designated charitable beneficiary, and that any person who acquires shares of our capital stock in violation of the ownership limits is not entitled to any dividends on such shares, to vote such shares or to receive any proceeds from the subsequent sale of such shares in excess of the lesser of the price paid for such shares or the amount realized from the sale (net of any commissions and other expenses of sale). A transfer of shares of our capital stock (including our common stock) in violation of the ownership limits is void ab initio under certain circumstances. Pursuant to our Charter, our Board, by vote of a supermajority of its members, may waive these ownership limits or create new limits. Our Board has provided a waiver of this stock ownership restriction to certain stockholders in connection with the Distribution and to Lennar in connection with the shares of common stock, held in the form of Class A common stock, retained by 87 Table of Contents Lennar after the Distribution. However, our Board may not grant an exemption from these restrictions to any proposed transferee whose ownership of our outstanding stock would result in our being “closely held” within the meaning of Section 856(h) of the Code or otherwise would result in our failing to qualify as a REIT, and any waivers granted will be subject to certain initial and ongoing conditions designed to protect our status as a REIT. These restrictions on transferability and ownership will not apply, however, if our Board determines that it is no longer in our best interest to qualify as a REIT or that compliance with the restrictions is no longer required in order for us to so qualify as a REIT. The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to all of our stockholders. Our Charter provides that our Board may revoke or otherwise terminate our REIT election if it determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT, without stockholder approval. If we cease to be a REIT, we will not be allowed a deduction for dividends paid to stockholders in computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates and to state and local taxes, which may have adverse consequences on our total return to our stockholders. New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify or remain qualified as a REIT. The U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S. federal income tax treatment of an investment in us. The U.S. federal income tax rules dealing with REITs are constantly under review by Congress, the IRS and the U.S. Department of the Treasury, which could result in statutory changes or revisions to regulations and administrative interpretations. There can be no assurance that any such future statutory or regulatory changes will not adversely impact our ability to qualify as a REIT or otherwise adversely affect our business, financial condition or results of operations. Any such changes could have a material adverse effect on an investment in shares of our common stock or on the market price thereof. We cannot predict whether, when or to what extent any new U.S. federal tax laws, regulations, or administrative interpretations will impact us or an investment in our shares. Prospective investors are urged to consult their tax advisors regard