Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-K as required by paragraph (b) of Rule 13a-15 or 15d-15 of the Exchange Act. Based upon such evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date and provided reasonable assurance that information required to be disclosed by us in the reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Managements Report on Internal Control Over
Financial Reporting and Attestation Report of the Registered Public Accounting Firm
This Form
10-K does not include a report of managements assessment regarding internal control over financial reporting or an attestation report of the Companys registered public accounting firm due to a
transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act) that occurred during the fourth quarter of the Companys fiscal year ended December 31, 2024, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item 9B. Other Information
Rule 10b5-1 Trading Arrangements
From time to time, members of the Board and officers of the Company may enter into Rule 10b5-1 trading
plans, which allow for the purchase or sale of common stock under pre-established terms at times when directors and officers might otherwise be prevented from trading under insider trading laws or because of
self-imposed blackout periods. Such trading plans are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and comply with the Companys insider trading policy.
During the three months ended December 31, 2024, none of the Companys directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a
non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance
The following information regarding our corporate governance and management following the Spin-Off. Prior to the Spin-Off we were not an independently operated company with governance and management.
Executive Officers
The following table sets forth information with respect to our executive officers as of March 25, 2025. The individuals listed as our
executive officers below also serve as officers of the Manager. As executive officers of the Manager, they manage the day-to-day affairs and carry out the directives of
our Board in the review, selection and recommendation of investment opportunities and operating acquired investments and monitoring the performance of those investments to ensure that they are consistent with our investment objectives. Millrose and
Millrose Holdings have no officers or employees except those provided by the Manager who are appointed as our officers by our Board upon recommendation from the Manager.
Our executive officers consist of Darren L. Richman, Chief Executive Officer and President, Garett Rosenblum, Chief Financial Officer and
Treasurer, Robert Nitkin, Chief Operating Officer, Rachel Presa, General Counsel and Secretary, and Adil Pasha, Chief Technology Officer.
Name
Age
Position(s)
Darren L. Richman
53
Chief Executive Officer and President
Garett Rosenblum
51
Chief Financial Officer and Treasurer
Robert Nitkin
37
Chief Operating Officer
Rachel Presa
45
General Counsel and Secretary
Adil Pasha
32
Chief Technology Officer
Darren L. Richman, Chief Executive Officer and President
Darren L. Richman is the Chief Executive Officer and President of Millrose. Mr. Richman co-founded
Kennedy Lewis with David Kennedy Chene in 2017, and is Co-Managing Partner of the firm. Mr. Richman was formerly a Senior Managing Director with The Blackstone Group from 2006 to 2016, where he focused on
special situation and opportunistic investments, and he sat on the Investment Committee for GSO Capital Partners LPs opportunistic credit funds and special situation funds. Before joining GSO Capital Partners, Mr. Richman worked at DiMaio
Ahmad Capital, where he was a Founding Member and the Co-Head of its Investment Research Team, from 2003 to 2006. Prior to joining DiMaio Ahmad Capital LLC, Mr. Richman was a Vice President and
Senior Special Situations Analyst at Goldman Sachs & Co, from 1999 to 2003. Mr. Richman began his career with Deloitte & Touche LLP, ultimately serving as a manager in the firms Mergers and Acquisitions Services Group,
from 1994 to 1999. He was formerly a Certified Public Accountant and a Member of the American Institute of Certified Public Accountants. Mr. Richman currently serves on the board of directors of Outward Bound USA and The Eastman Kodak Company.
He is a member of the Economic Club of New York and formerly served on its strategic planning committee.
Garett Rosenblum, Chief Financial Officer and
Treasurer
Garett Rosenblum is the Chief Financial Officer and Treasurer of Millrose. Mr. Rosenblum joined Kennedy Lewis in 2024
as a Managing Director. Previously, Mr. Rosenblum served as Senior Vice President and Chief Accounting Officer for Safehold Inc., and its predecessor iStar Inc., both publicly traded REITs, for ten years. Prior to joining iStar,
Mr. Rosenblum served as the Chief Accounting Officer at Arbor Realty Trust, also a publicly traded REIT. Mr. Rosenblum served as Director of Accounting at Citi Property Investors, a division of Citigroup, for six years. Mr. Rosenblum
also spent six years at Ernst and Young LLP where he served both
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publicly traded real estate clients and private equity real estate funds. Mr. Rosenblum is a graduate of the St. Johns University School of Law where he earned his Juris Doctor degree.
He also holds a Bachelor of Science degree in both Finance and Public Relations from Syracuse University. Mr. Rosenblum is a member of the New York State Bar and is a Certified Public Accountant in New York.
Robert Nitkin, Chief Operating Officer
Robert Nitkin is the Chief Operating Officer of Millrose. Mr. Nitkin joined Kennedy Lewis in 2020 and is a Managing Director focused on
the firms activities across the Real Estate and Homebuilding sectors. Mr. Nitkin was formerly an investment principal at GPS Investment Partners (GPS), an institutional investment firm, where he was responsible for evaluating
and executing transactions across GPSs credit and private equity investment strategies. Prior to joining GPS in 2015, Mr. Nitkin was an Associate in the Securities Division at Goldman Sachs & Co. Previously, he worked at Ernst
and Young LLP as a member of the Transaction Advisory group. Mr. Nitkin earned his undergraduate degree from the Cornell University School of Engineering and holds an M.B.A. from Columbia Business School.
Rachel Presa, General Counsel and Secretary
Rachel Presa is the General Counsel and Secretary of Millrose. Ms. Presa joined Kennedy Lewis in 2021 and is a Managing Director who has
served in various legal capacities across the firm. Ms. Presa has 14 years of experience representing and advising investment funds, financial institutions, and other clients in legal and compliance matters, including regulatory investigations
and enforcement, civil litigation, and bankruptcy and restructuring. Ms. Presa was formerly Senior Counsel at the law firm of Akin Gump Strauss Hauer & Feld LLP from 2010 to 2021. Prior to her legal career, Ms. Presa taught
English and writing in public high schools in North Carolina and Maryland. Ms. Presa served on the Junior Advisory Board of Her Justice from 20192022. Ms. Presa has a B.A. from Goucher College and earned her J.D. at New York
University School of Law.
Adil Pasha, Chief Technology Officer
Adil Pasha is the Chief Technology Officer of Millrose. Mr. Pasha is a Director at Kennedy Lewis and has been responsible for managing the
firms technology and analytics capabilities since 2022. Mr. Pasha was formerly a Data Scientist at Schonfeld Strategic Advisors LLC, a multi-strategy hedge fund, where he was responsible for the funds performance reporting from 2021
to 2022. Prior to joining Schonfeld Strategic Advisors LLC, Mr. Pasha was a Product Manager focused on designing and building accounting/financial applications from 2020 to 2021. Mr. Pasha started his career in consulting at
PricewaterhouseCoopers LLP in 2017. Mr. Pasha has a B.A. in Accounting and Finance from the Georgia Institute of Technology. He is a Certified Public Accountant.
Board of Directors
The following table
sets forth information with respect to the persons serving on our Board as of March 25, 2025. Each of these persons is expected to serve on the Board until Millroses first annual meeting of stockholders as a publicly traded company. If re-elected to the Board at such annual meeting of stockholders, each person will serve until the next annual meeting of stockholders and until their respective successors are duly elected and qualify. Biographical
information about each of these persons follows the table.
Each person listed below was identified, evaluated and selected for
appointment to the Board by the joint efforts of Lennar and our Manager, without the use of any third-party director candidate search firm. There are no other arrangements or understandings between anyone listed below and any other persons pursuant
to which the persons listed below were selected to serve on the Board.
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Name
Age
Position(s)
Carlos A. Migoya
74
Chair of the Board
Patrick Bartels
49
Director
Matthew B. Gorson
76
Director
Kathleen B. Lynch
59
Director
M. Alison Mincey
50
Director
Carlos A. Migoya
Carlos A. Migoya is the Chair of our Board. He currently serves as President and Chief Executive Officer of Jackson Health System, the public
health system for Miami-Dade County, which is one of the nations largest and most respected public healthcare networks. Prior to joining his current role in May 2011, Mr. Migoya served as City Manager of Miami from 2010 to 2011, managing
various budget issues on behalf of the city. Prior to serving as City Manager, Mr. Migoya worked in various roles in the banking industry for more than 35 years, including for Wells Fargo & Company and its predecessors, including
Wachovia Corporation and First Union Corporation, retiring as Regional President, North Carolina and Chief Executive Officer, Atlantic Region for Wachovia Corporation.
Mr. Migoya has previously served on the board of directors of Mednax, Inc. (now known as Pediatrix Medical Group, Inc.), a national
provider of physician services across 37 states, from 2019 to 2021. Mr. Migoya is also actively involved in several community organizations, including having served as the foundation chairman of Florida International University and as a member
of the universitys Deans Council and of the College of Business Administrations principal advisory board. Mr. Migoya currently sits on the boards of Florida Chamber of Commerce the Florida Hospitals Association and the Safety
Net Hospitals Alliance of Florida. Mr. Migoya previously served as a board member of Downtown Miami Charter School, Miami Dade College and the Beacon Council.
Mr. Migoya has several decades of experience working in both the financial and banking industry and in the healthcare management
industry. He brings to the board skills in strategic planning, management of complex organizations and financial acumen. In Mr. Migoyas first year as President and Chief Executive Officer of Jackson Health System, he led a transformation
that reversed years of significant losses (including an $82 million loss in the prior year) and produced a more than $8 million surplus. As evidenced by his successful campaign for a $830 million plan to renovate, modernize and expand
Jacksons facilities, Mr. Migoya is also highly experienced in effective advocacy and key stakeholder engagement and oversight of large-scale initiatives. All of these skills and experiences are critical to the initial and ongoing success
of a newly public company like Millrose.
Patrick J. Bartels
Patrick J. Bartels currently serves as the Managing Member of Redan Advisors LLC, a firm that provides fiduciary advisory services, including
board of director representation and strategic planning for domestic and international public and private business entities. Prior to founding Redan Advisors LLC in 2018, Mr. Bartels served as a senior investment professional for investments in
North America, Asia and Europe, and in a broad universe of industries, including serving as a Managing Principal at Monarch Alternative Capital LP, a private investment firm that focuses primarily on event driven credit opportunities, from 2002 to
2018, and before that as a Research Analyst for high yield investments at Invesco Ltd., an investment management company, where he analyzed primary and secondary debt offerings of companies in various industries. Mr. Bartels began his career at
Pricewaterhouse Coopers LLP, where he was a Certified Public Accountant.
Mr. Bartels has served on the board of directors of
numerous publicly traded companies, including WCI Communities, Inc. from 2009 to 2017, Douglas Elliman Inc. from 2024 to present, Arch Resources, Inc. from 2016 to 2023, Pyxus International Inc. from 2023 to Present, Trinity Place Holdings Inc. from
2023 to 2024, and
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Noble Corporation from 2021 to 2022, Marblegate Acquisition Corp. from 2022 to present, Libbey Inc. in 2022, Monitronics International, Inc. from 2019 to 2023, Parker Drilling Company from 2019
to 2020, Vanguard Natural Resources, Inc. in 2019, View, Inc. in 2024, AgileThought from 2023 to 2024, Hexion Inc. from 2019 to 2022, Centric Brands Inc. from 2019 to 2022, B. Riley Principal Merger Corp. from 2019 to 2020 and B. Riley Principal
Merger Corp. II in 2020.
Mr. Bartels has more than 25 years of investing and governance experience and has an extensive track record
of driving value added returns for all stakeholders through governance, incentive alignment, cost rationalization, corporate finance, capital markets and mergers and acquisitions. Mr. Bartels brings to the board experience in oversight of the
management of a REIT, expertise in financial and accounting matters as a certified public accountant and is a holder of the Chartered Financial Analyst designation, and industry knowledge of the homebuilding industry from his work as an investment
analysis for more than 10 years. All of these skills bring significant value to Millrose as a new publicly traded company intending to qualify as a REIT. Mr. Bartels also qualifies as an audit committee financial expert and has experience
serving as chair of audit committees on the boards of public and private companies.
Matthew B. Gorson
Matthew B. Gorson currently serves as Senior Chairman of Greenberg Traurig, LLP (Greenberg Traurig), an international
multi-practice law firm. Mr. Gorson began his career at Greenberg Traurig in 1973 as the firms 14 th lawyer, leading all varieties of real estate transactions, as well as playing a
key role in revitalizing the urban landscape and changing the skyline of Miami. Prior to his role as Senior Chairman, he served as Greenberg Traurigs President and Chairman. As a senior partner and former Chair of Greenberg Traurigs real
estate practice, Mr. Gorson was instrumental in developing the firm as one of the nations and worlds leading real estate legal advisors.
Mr. Gorson is Founder and past Chairman of the Downtown Miami Charter School. Mr. Gorson currently serves as Chairman Emeritus and a
member of the Executive Committee of Big Brothers Big Sisters of Greater Miami, where he previously served two terms as Chairman of the Board. Mr. Gorson also currently serves as a member of the Jackson Health Foundation, the private
fundraising arm of Jackson Health System. Mr. Gorson is a former board member and Campaign Chairman of United Way of Miami-Dade and a former board member of the New World Symphony, Greater Miami Chamber of Commerce, the City of Miami Downtown
Development Authority, the 11th Judicial Circuit Historical Society, and Friends of the Underline. Mr. Gorson is a Board Emeritus Member of Tulane University and founder of both Mt. Sinai Hospital and Baptist Hospital.
Mr. Gorson has over five decades of demonstrated expertise in the real estate industry and is one of the
most in-demand real estate attorneys in South Florida. Mr. Gorson brings to the board skills in complex real estate transactions and navigating property, real estate development and construction
and land use laws and regulations. Mr. Gorson has deep market and industry knowledge and has represented and been a trusted advisor to many of the largest development companies in South Florida, including the Related Group, Swire Pacific
Realty, Terra Group, Swerdlow Companies, the Taplin Family, the Soffer Family and Julius and Eddie Trump. He has also worked with the University of Miami and St. Thomas University on real estate issues and served as special counsel to the City of
Miami, Miami-Dade County, and the Perez Art Museum of Miami on high-profile projects. Mr. Gorsons experience in the real estate industry and his established legal expertise is a significant asset to Millrose as a new land banking company
entering a competitive market.
Kathleen B. Lynch
From 2013 to her retirement in 2018, Kathleen B. Lynch served as Group Managing Director and the Chief Operating Officer of UBS Wealth
Management Americas and UBS Americas Holding LLC, an intermediate holding company for the U.S. based subsidiaries of UBS Group AG, a global wealth manager and financial services firm. Prior to that, Ms. Lynch served as Chief Operating Officer
of Bank of America Merrill Lynch
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Global Research, where she was responsible for Publishing & Distribution, Supervisory Analysts, Business Management and various support functions. Ms. Lynch has served in a variety
of leadership positions in global markets and investment banking, global research and wealth management for more than 30 years.
Ms. Lynch has served on the board of directors of UBS Americas Holding LLC since 2016, where she serves on the audit & finance
committee, cyber & technology committee and the governance, oversight and sustainability committee. Ms. Lynch also serves on the board of Eastman Kodak Corporation, where she serves as chair of the audit and finance committee. From
2017 to 2022, Ms. Lynch served on the board of directors of The Depository Trust & Clearing Corporation, the premier post-trade market infrastructure for the worlds financial markets.
Ms. Lynch has over three decades of experience in the banking and financial industries. Ms. Lynch brings to the Board extensive
skills, leadership and deep expertise in strategy execution and development, risk and talent management and regulatory matters. Her leadership experience is across a diverse set of businesses including wealth management, operations, technology and
global markets. She has held global, regional, and business responsibilities throughout her career, overseeing major transformation initiatives, business integration efforts and implementation of digital strategy and platforms. Ms. Lynch also
brings a strong focus on the full spectrum of risk types in crisis management. Ms. Lynch also qualifies as an audit committee financial expert and has experience serving as chair of an audit committees of a public company board.
M. Alison Mincey
M. Alison Mincey
currently serves as Senior Vice President and Chief Human Resources Officer at the University of Miami Health System, where she is responsible for strategic human resources initiatives, practices, tactical workforce plans, and overall operations
that support patient care, research, and academic objectives across the enterprise of the University of Miami, the Health System, and the Miller School of Medicine. Prior to joining the University of Miami Health System in 2022, Ms. Mincey
served in various leadership roles at The Ohio State University Wexner Medical Center from 2014 to 2022, most recently as Senior Associate Vice President, Human Resources, where she provided strategic advice on all aspects of human resources,
including employee and labor relations, talent acquisition, including faculty/physician recruitment, talent management, information technology and compensation/benefits, including physician compensation. Prior to joining The Ohio State University,
as a licensed attorney, Ms. Mincey worked as Managing Counsel from 2007 to 2014 at Mutual Nationwide Insurance Company, a U.S. insurance and financial services company, where she was responsible for legal support and governance oversight of the
companys human resources organization.
Ms. Mincey currently serves on the board of directors of United Way Miami (formerly
known as United Way of Miami-Dade) and has previously served as a member of the Franklin County, Ohio, Workforce Development Board.
Ms. Mincey has 15+ years of human resource management experience within the higher education and academic health care setting.
Ms. Mincey is a notable leader in human resource management, and brings to the board skills in the areas of talent acquisition, training and leadership development, organizational culture, and employee relations, all of which are crucial to
Millroses ability to scale our operations and grow as a newly public company in a competitive market. Ms. Mincey has experience working with public companies, government contractors and academic research institutions, and her background
in providing legal support and governance oversight at a public company are useful assets to the Board.
Ms. Mincey has also been
active in community organizations throughout her career, leading a campaign to support the Mid-Ohio Food Bank and receiving a community service award from Columbus City Schools. Ms. Mincey also
recently earned an inaugural HR Impact Award from Columbus Business First and was recently honored by the Miami Marlins as a Woman of Empowerment in the greater Miami community.
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None of the directors and executive officers have family relationships with any member of
the Board or any executive officer of Millrose. There are no arrangements or understandings between any of the directors or any other person and Millrose pursuant to which the appointees were appointed to serve in his or her respective role.
Director Independence
Following the Spin-Off, our Board determined that all five members of the Board, including all of the members of the Audit Committee and all of the members of the Compensation Committee, qualify as independent directors according
to the standards for independence specified by the NYSE.
Code of Business Conduct and Ethics
Our Board has adopted a Code of Business Conduct and Ethics that requires all of our business activities to be conducted in compliance with
applicable laws and regulations and the highest ethical principles. All of our directors, officers and employees, including but not limited to, our principal executive officer, principal financial officer and principal accounting officer or
controller, are required to read, understand and abide by the Code of Business Conduct and Ethics, and all employees of Kennedy Lewis who render services under the Management Agreement may additionally be subject to other policies that Kennedy Lewis
may adopt from time to time.
The Code of Business Conduct and Ethics is expected to deter wrongdoing and to promote, among other things,
honest and ethical conduct and to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner. The Code of Business Conduct and Ethics is intended to cover the requirement of a Code of Ethics for
senior financial officers as provided by the SECs rules with respect to Section 406 of the Sarbanes-Oxley Act.
The Code of
Business Conduct and Ethics is accessible on our website. Any waiver of the Code of Business Conduct and Ethics for directors or executive officers may be made only by the Board or a committee of the Board. We will disclose any amendment to, or
waiver from, a provision of the Code of Business Conduct and Ethics for the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website within four
business days following the date of the amendment or waiver. In addition, we will disclose on the website any waiver from the Code of Business Conduct and Ethics for any of the other executive officers or for directors. Neither our website, nor the
information posted on it, is incorporated by reference into this Form 10-K.
Director Nomination Process
Stockholder Recommendations for Director Nominees
A stockholder who wishes to recommend a prospective nominee for nomination by the Board may notify the Nominating and Corporate Governance
Committee of the intended nomination in writing and provide any required additional information, as directed by the Nominating and Corporate Governance Committee and to the same extent as may be required in accordance with the Bylaws for stockholder
nominations of individuals for election to the Board, as well as any other supporting material the stockholder considers appropriate. Pursuant to the stockholder nomination provisions in the Bylaws, this requires that the stockholder send certain
information, including information about the candidate to our secretary not later than 5:00 p.m. Eastern Time on the 90th day and not earlier than the 120th day prior to the first anniversary of the date of the proxy statement for the preceding
years annual meeting. For our first annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days form the first anniversary of the date of the preceding years annual meeting, to be
timely, such notice must be delivered not earlier than the 120 th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90 th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made.
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Audit Committee
The Audit Committee consists of Patrick Bartels, Kathleen Lynch and Carlos Migoya, with Patrick Bartels serving as the chair of the Audit
Committee and the audit committee financial expert. The Audit Committees primary function is to assist our Board in fulfilling its oversight responsibilities by reviewing the financial information provided to the stockholders and others, the
system of internal controls which the Manager has established and the audit and financial reporting process. The Audit Committee: (1) has direct responsibility for appointing and overseeing an independent registered public accounting firm
registered with the Public Company Accounting Oversight Board to serve as our independent auditors; (2) reviews the plans and results of the audit engagement with our independent registered public accounting firm; (3) approves audit and non-audit professional services (including the fees and terms thereof) provided by, and the independence of, our independent registered public accounting firm; and (4) consults with our independent registered
public accounting firm regarding the adequacy of our internal controls.
Our Board determined affirmatively that Patrick Bartels qualifies
as an audit committee financial expert as such term has been defined by the SEC in Item 407(d)(5) of Regulation S-K and (2) each member of the Audit Committee is financially
literate as that term is defined by the NYSE listing standards and meets the definition for independence for the purposes of serving on the Audit Committee under the NYSE listing rules and requirements and Rule 10A-3 under the Exchange Act.
Compensation Committee
The Compensation Committee consists of Alison Mincey, Kathleen Lynch and Patrick Bartels, with Alison Mincey serving as the chair of the
Compensation Committee. The primary function of the Compensation Committee is to assist our Board in fulfilling its responsibilities with respect to officer (to the extent applicable) and director compensation. The Compensation Committee reviews the
compensation and benefits paid by us to our directors, including, but not limited to, recommending to our Board compensation for all non-employee directors, including Board and committee retainers, meeting
fees and equity-based compensation and, in the event we hire employees, the compensation paid to our executive officers as well as any employment, severance and termination agreements or arrangements made with any executive officer and, if required,
produces the report to be included in our annual proxy statement. Recommendations of non-employee director compensation will be determined in consultation with a reputable executive compensation consulting
firm that the Compensation Committee shall elect and engage. We are externally managed by the Manager pursuant to the Management Agreement and we currently do not expect to retain any officers other than those officers provided by the Manager and
duly elected by our Board upon recommendation from the Manager.
Our Board has determined affirmatively that each member of the
Compensation Committee meets the definition for independence for the purpose of serving on the Compensation Committee under applicable rules of the NYSE and each member of our Compensation Committee is a
non-employee director as defined in Rule 16b-3 under the Exchange Act.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee consists of Matthew Gorson, Carlos Migoya and Alison Mincey, with Matthew Gorson serving as
the chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committees primary function is to assist our Board in fulfilling its responsibilities with respect to director nominations, corporate
governance, Board and committee evaluations and conflict resolutions. The Nominating and Corporate Governance Committee assists our Board in this regard by: (1) identifying individuals qualified to serve on our Board, consistent with criteria
approved by our Board, and recommending that our Board select a slate of director nominees for election by our stockholders at the annual meeting of our stockholders; (2) developing and implementing the process necessary to identify prospective
members of our Board; (3) determining the advisability of retaining any search firm or consultant to assist in the identification and evaluation of candidates for membership on our Board; (4) overseeing the Boards
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annual evaluation of our Board, each of the committees of our Board and management; (5) developing and recommending to our Board a set of corporate governance guidelines; and
(6) periodically reviewing our corporate governance guidelines and suggesting improvements thereto to our Board. The Nominating and Corporate Governance Committee fulfills these responsibilities primarily by carrying out the activities
enumerated in its charter and in accordance with current laws, rules and regulations.
Our Board has determined affirmatively that each
member of the Nominating and Corporate Governance Committee meets the definition of independence under the NYSE listing rules and requirements.
Insider Trading Policy
We have adopted
insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Companys securities or certain other companies securities by directors, officers and employees, or the Company itself, that we believe
are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the NYSE listing standards. The forgoing summary of the insider trading policy does not purport to be complete and is qualified in its entirety by
reference to the full text of the Companys insider trading policy that has been filed as Exhibit 19.1 to this Form 10-K.
Item 11. Executive Compensation
The following information regarding our executive compensation is as of February 7, 2025 following the
Spin-Off. Prior to the Spin-Off, we were not an independently operated company with governance and management.
Compensation of our Executive Officers
We are an externally managed REIT, and as such, all of our executive officers are provided by KL pursuant to the Management Agreement, and all
of our executive officers are employees of KL and are compensated directly by KL and not by us. KL is compensated for the management services provided to us in accordance with the Management Agreement.
See Part III, Item 13. Certain Relationships and Related Transactions, and Director IndependenceTransactions with our
ManagerManagement Agreement below for a discussion of fees paid to our Manager and its affiliates.
2024 Omnibus Incentive Plan
In 2024, our sole stockholder at the time adopted the Millrose Properties, Inc. 2024 Omnibus Incentive Plan (the 2024
Incentive Plan) for our employees, officers, directors, consultants and advisors. The description of the 2024 Incentive Plan set forth below is a summary of the material features of the 2024 Incentive Plan. This summary, however, does not
purport to be a complete description of all the provisions of the 2024 Incentive Plan. This summary is qualified in its entirety by reference to the 2024 Incentive Plan filed as Exhibit 10.18 to this Form
10-K. We do not currently have any employees and, as we are externally managed by the Manager.
General
The purpose of the 2024 Incentive Plan is to assist Millrose in attracting, retaining, motivating and rewarding certain employees,
officers, directors, consultants and advisors, each if any, and directors of Millrose and its affiliates and promoting the creation of long-term value for stockholders of Millrose by closely aligning the interests of participants with those of
stockholders.
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Administration
The 2024 Incentive Plan is administered by the Compensation Committee. The Compensation Committee has the authority to construe and interpret
the 2024 Incentive Plan, grant awards and make all other determinations necessary or advisable for the administration of the 2024 Incentive Plan.
Nonemployee Director Award Limits
The
aggregate maximum value of all awards granted under the 2024 Incentive Plan (determined as of the date of grant) in any one calendar year to any non-employee director for service as a non-employee director during such calendar year, must not exceed $750,000. The independent members of the Board or the Compensation Committee may determine to make an exception to this limit, provided that the
director for whom the exception is sought does not participate in such determination.
Eligibility
Employees, officers, directors, consultants and advisors of Millrose and its affiliates are eligible to receive awards under the 2024 Incentive
Plan. The Compensation Committee determines who will receive awards and the terms and conditions associated with such awards.
Share Reserve and
Counting
Millrose reserved 11,620,019 shares of Class A common stock for issuance under the 2024 Incentive Plan (the Share
Pool).
Shares subject to awards granted under the 2024 Incentive Plan that are required to be paid in cash pursuant to their terms
will not reduce the Share Pool. In addition, shares that are subject to awards granted under the 2024 Incentive Plan that terminate, expire or are cash-settled, canceled, forfeited, exchanged or surrendered without having been exercised, vested or
settled will be available for issuance again under the Share Pool. For clarity, this includes (i) shares tendered by participants, or withheld by Millrose, as full or partial payment to Millrose upon exercise of options granted under the 2024
Incentive Plan; (ii) shares reserved for issuance upon the grant of stock appreciation rights (SARs), to the extent the number of reserved shares exceeds the number of shares actually issued upon the exercise of the SARs; and
(iii) shares of Class A common stock withheld by or otherwise remitted to Millrose to satisfy tax withholding obligations upon the exercise, lapse of restrictions or settlement of awards under the 2024 Incentive Plan.
Awards
The 2024 Incentive Plan
authorizes the award of stock options, restricted stock, restricted stock units (RSUs), SARs and other stock-based awards. For stock options that are intended to qualify as incentive stock options (ISOs) under
Section 422 of the Code, the maximum number of shares subject to ISO awards is no more than 11,620,019 shares. All awards under the 2024 Incentive Plan are set forth in award agreements, which detail the terms and conditions of the awards,
including any applicable vesting and payment terms and post-termination exercise limitations. A brief description of each award type follows.
Stock Options . Stock options provide for the purchase of shares of Class A common stock at an
exercise price set on the grant date. The 2024 Incentive Plan provides for the grant of ISOs only to employees of Millrose and its affiliates. Nonqualified options (NSOs) may be granted to employees, officers, directors and consultants
of Millrose and its affiliates. The exercise price of each option to purchase shares of Class A common stock must be at least equal to the fair market value of shares of Class A common stock on the date of grant. The exercise price of ISOs
granted to 10% or more stockholders must be at least equal to 110% of the fair market value of shares of Class A common stock on the date of grant. Options granted under the 2024 Incentive Plan may be exercisable at such
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times and subject to such terms and conditions as the Compensation Committee determines. The maximum term of options granted under the 2024 Incentive Plan is ten years (five years in the case of
ISOs granted to 10% or more stockholders). No dividend or dividend equivalent rights shall be paid out on options.
Restricted Stock . The Compensation Committee may grant awards consisting of shares of Class A common
stock subject to certain restrictions that will lapse upon the terms that the Compensation Committee determines at the time of grant. The Compensation Committee will determine the requirements for the lapse of the restrictions for the restricted
stock awards, which may be based on the service of the participant for a specified time period or the attainment of one or more performance goals. Participants holding restricted stock awards will have the rights of a stockholder and to receive all
dividends and other distributions with respect thereto, unless the Compensation Committee determines otherwise to the extent permitted under applicable law. If a participant has the right to receive dividends paid with respect to a restricted stock
award, such dividends shall not be paid to the participant until the underlying award vests. Unless otherwise provided in an award agreement or otherwise, vesting will cease on the date the participant no longer provides services to Millrose and
unvested shares will be repurchased by Millrose as soon as practicable following such termination. Any shares granted under a restricted stock award are nontransferable, except in limited circumstances.
RSUs . An RSU is a notional unit representing the right to receive one share of Class A common stock
(or the cash value of one share of common stock) on a specified settlement date. The Compensation Committee may grant awards consisting of RSUs subject to restrictions on sale and transfer. The Compensation Committee may condition the grant or
vesting of RSUs on the achievement of performance conditions and/or the satisfaction of a time-based vesting schedule. Unless otherwise determined by the Compensation Committee at the time of award, vesting will cease on the date the participant no
longer provides services to Millrose and unvested RSUs will be forfeited. Further, unless otherwise set forth in a Participants award agreement, a Participant shall be not entitled to dividends or dividend equivalents with respect to RSUs
prior to settlement.
Stock Appreciation Rights . SARs provide for a payment, or payments, in cash, shares of Class A common
stock or other property, as specified in the applicable award, to the holder based upon the difference between the fair market value of shares of Class A common stock on the date of exercise and the stated base price of the stock appreciation
right. The base price must be at least equal to the fair market value of shares of Class A common stock on the date the stock appreciation right is granted. SARs may vest based on time or achievement of performance conditions, as determined by
the Compensation Committee in its discretion. The maximum term of SARs granted under the 2024 Incentive Plan is ten years. No dividends or dividend equivalents shall be paid on SARs.
Other Stock-Based Awards . The Compensation Committee is authorized, subject to limitations under
applicable law, to grant participants other awards under the 2024 Incentive Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based upon or related to Class A common stock. The Compensation
Committee may also grant shares of Class A common stock as a bonus and grant awards in lieu of obligations of Millrose or its affiliates to pay cash or deliver property under the 2024 Incentive Plan or other plans or compensatory arrangements.
Adjustment
In the
event of changes in the outstanding Class A common stock or in the capital structure of Millrose (i) by reason of stock dividends, extraordinary cash dividends, stock splits, reverse stock splits, recapitalizations, reorganizations,
mergers, amalgamations, consolidations, combinations, exchanges or other relevant changes in capitalization, (ii) in connection with any extraordinary dividend declared and paid in respect of shares of Class A common stock, or
(iii) in the event of any change in applicable laws or circumstances, in each case, that results in or could result in, in either case, as determined by the Compensation Committee in its sole discretion, any substantial dilution or enlargement
of the rights intended to be granted to, or available for, participants in the
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2024 Incentive Plan, awards shall be equitably and proportionally adjusted or substituted, as determined by the Compensation Committee, in its sole discretion, as to the number, price or kind of
a share of Class A common stock, other securities or other consideration subject to such awards.
Generally, except as otherwise
provided by the Compensation Committee in an award agreement or otherwise, in connection with certain corporate events, including but not limited to, a change in control (as defined in the 2024 Incentive Plan), the Compensation Committee
may provide for any one or more of the following (i) the assumption or substitution of any or all awards in connection therewith, with awards that vest based on performance criteria being deemed earned at the target level (or if no target is
specified, the maximum level) and converted into solely service-based vesting awards, (ii) the acceleration of vesting of any or all awards not assumed or substituted in connection with the corporate event (with vesting of performance-based
awards deemed earned at the target level (or if no target is specified, the maximum level), unless otherwise specified in the applicable award agreement), (iii) the cancellation of any or all awards not assumed or substituted in connection with such
corporate event (whether vested or unvested) together with the payment to participants holding vested awards so canceled of an amount in respect of cancellation based on the per-share consideration being paid
for the Class A common stock in connection with such corporate event (or $0 in the case of options, SARs or other awards where the per-share consideration is less than the applicable exercise or base
price), (iv) the cancellation or any or all options, SARs and other awards subject to exercise not assumed or substituted in connection with any such corporate event (whether vested or unvested), after providing the holder thereof with a period of
at least ten days to exercise such awards and (v) the replacement of any and all awards (subject to certain limitations) with a cash incentive program that preserves the value of the awards so replaced.
Plan Amendment and Termination
The Board
or Compensation Committee may amend the 2024 Incentive Plan and awards at any time and from time to time. The Board or the Compensation Committee may suspend or terminate the 2024 Incentive Plan at any time. Unless sooner terminated, the 2024
Incentive Plan shall terminate on the day before the tenth anniversary of the date the stockholders approve the 2024 Incentive Plan. No awards may be granted under the 2024 Incentive Plan while it is suspended.
Compensation of Directors
Independent Director
Compensation
During 2024, Millrose was not an independent public company and did not pay any director compensation. For the year ending December 31, 2025, the initial Millrose director compensation program for independent directors is as follows:
an annual equity retainer of either restricted shares of Class A common stock or restricted stock units
covering shares of Class A common stock, in each case, having a grant date fair value equal to $150,000;
an annual equity retainer of either restricted shares of Class A common stock or restricted stock units
covering shares of Class A common stock, in each case, having a grant date fair value equal to $150,000;
an annual cash retainer of $80,000;
an additional annual cash retainer of $40,000, $20,000 and $10,000 for service as chairperson of the Audit
Committee, chairperson of the Compensation Committee, and chairperson of the Nominating and Corporate Governance Committee, respectively, and an additional annual cash retainer of $15,000, $10,000, and $7,500 for service as a member (other than as a
chairperson) of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, respectively; and
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an additional $50,000 annual cash retainer for the chair of the Board.
We also reimburse all members of the Board for their reasonable expenses incurred in attending Board and committee meetings. All cash
compensation for directors is covered by the Management Fee and not separately paid by Millrose, in accordance with the Management Agreement. To the extent any portion of directors compensation consists of equity, such awards would need to be
approved by the Compensation Committee or the Board and separately issued pursuant to a Millrose equity compensation plan. See 2024 Omnibus Incentive Plan above for more information.
Our Compensation Committee periodically reviews and makes recommendations to our Board regarding the form and amount of compensation for
directors. The Compensation Committee is responsible for recommending to the Board for approval the structure and amount of non-employee director compensation, and such recommendations shall be made in
consultation with a reputable executive compensation consulting firm that the Compensation Committee shall elect and engage.
Compensation Committee
Interlocks and Insider Participation
During the fiscal year ended December 31, 2024, Millrose was not an independent public
company and did not have a Compensation Committee.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and Management
The following table provides information with respect to the beneficial ownership of Millroses common stock as of March 25, 2025 by
(1) each person who is a beneficial owner of more than 5% of the outstanding shares of Millroses common stock, (2) each of Millroses directors and executive officers, and (3) all directors and executive officers as a
group.
Except as otherwise noted in the footnotes below, each person or entity identified below has sole voting and investment power with
respect to such securities. As of March 25, 2025, we had outstanding an aggregate of 166,003,497 shares of common stock on a fully diluted basis, including the shares of Class A common stock comprising approximately 20% of Millroses
total outstanding common stock beneficially owned by Lennar, as described below.
Name of Beneficial Owner
Title of Class
Number of Shares
Beneficially
Owned
Percent of Shares
by Class
Beneficially
Owned
Directors and Executive Officers
Carlos A. Migoya
Class A common stock
10,106
*
Patrick Bartels
Class A common stock
*
Matthew B. Gorson
Class A common stock
2,500
*
Kathleen B. Lynch
Class A common stock
*
M. Alison Mincey
Class A common stock
*
Darren L. Richman (1)
Class A common stock
309,848
*
Garett Rosenblum
Class A common stock
5,900
*
Robert Nitkin
Class A common stock
3,225
*
Rachel Presa
Class A common stock
1,630
*
Adil Pasha
Class A common stock
*
All current directors and executive officers as a group (10 persons)
Class A common stock
333,209
*
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Name of Beneficial Owner
Title of Class
Number of Shares
Beneficially
Owned
Percent of Shares
by Class
Beneficially
Owned
5% Stockholders
Lennar Corporation (2)
5505 Waterford District Drive,
Miami, Florida 33126
Class A common stock
33,200,053
21.5
%
Stuart Miller (3)
Class A common stock
838,334
*
5505 Waterford District Drive
Miami, Florida 33126
Class B common stock
11,670,757
98.7
%
The Vanguard Group (4)
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
Class A common stock
17,908,403
11.61
%
BlackRock, Inc. (5)
50 Hudson Yards
New York, New York 10001
Class A common stock
16,044,736
10.4
%
Greenhaven Associates, Inc.
(6)
600 Brickell Avenue, suite 1400
Miami, FL, 33131
Class A common stock
7,881,017
5.11
%
*
Represents beneficial ownership or voting power of less than one percent (1%).
(1)
Consists of 265,848 shares owned directly by Mr. Richman and 44,000 shares held by a trust over which
Mr. Richman has shared voting power and sole investment power.
(2)
Pursuant to the Schedule 13D filed on February 14, 2025, Lennar Corporation has sole voting power and sole
dispositive power with respect to 33,200,053 shares. Lennar will not exercise its voting rights with respect to this stock for as long as it retains the shares, and Lennar expects to dispose of this stock through a subsequent spin-off, split-off, public offering, private sale or any combination of these potential transactions.
(3)
Pursuant to the Schedule 13Ds filed on February 14, 2025, of the shares reflected in the table,
Mr. Miller directly or indirectly is the beneficial owner of 838,334 shares of Class A common stock and 11,670,757 shares of Class B common stock, which such shares consist of (i) 11,405 shares of Class A common stock in
Mr. Millers 401K account of which Mr. Miller has sole voting and investment power, (ii) 269,025 shares of Class A common stock beneficially owned by the Miller Foundation, a charitable family foundation of which Mr. Miller
has shared voting and investment power, (iii) 3,330 shares of Class A common stock beneficially owned by Stuart A. Miller 2024 GRAT, of which Mr. Miller has sole voting and investment power, (iv) 100,000 shares of Class A common stock
beneficially owned by Stuart A. Miller 2024 GRAT 2, of which Mr. Miller has sole voting and investment power, (v) 204,574 shares of Class A common stock beneficially owned by the Stuart A. Miller Foundation, a charitable foundation of
which Mr. Miller has shared voting and investment power, (vi) 250,000 shares of Class A common stock directly beneficially owned by Mr. Miller, (vii) 10,543,663 shares of Class B common stock beneficially owned by MP Alpha
Holdings LLLP (MP Alpha Holdings), of which Mr. Miller has sole voting and investment power, (viii) 273,142 shares of Class B common stock beneficially owned by the Miller Charitable Fund LLLP (Miller Charitable
Fund), a charitable fund of which Mr. Miller has sole voting and investment power and (ix) 853,952 shares of Class B common stock directly beneficially owned by Mr. Miller. Mr. Miller is on the board of directors of the
Miller Foundation with each of his brother and sister and is therefore deemed to control such entity. Mr. Miller is trustee of each of the Stuart A. Miller 2024 GRAT and Stuart A. Miller 2024 GRAT 2. Mr. Miller is a director of the Stuart
A. Miller Family Foundation. Mr. Miller is the sole officer and the sole director of LMM Family Corp. (LMM), which is the general partner of each of MP Alpha Holdings. MP Alpha Holdings is the holder of a majority of the partnership
interests in Miller Charitable Fund and LMM is the general partner of Miller Charitable Fund.
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(4)
Pursuant to the Schedule 13G filed on March 6, 2025, the Vanguard Group has shared voting power with
respect to 62,063 shares, sole dispositive power with respect to 17,591,339 shares, and shared dispositive power with respect to 317,064 shares.
(5)
Pursuant to Schedule 13G filed on March 7, 2025, BlackRock, Inc. (BlackRock) has sole voting
power with respect to 15,715,473 shares and sole dispositive power with respect to 16,044,736 shares. BlackRock reports that iShares Core S&P Small-Cap ETF has the power to direct the receipt of dividends
from, or the proceeds from the sale of more than five percent or greater of our outstanding shares.
(6)
Pursuant to the Schedule 13G filed on February 19, 2025, Greenhaven Associates, Inc. has sole voting power
with respect to 2,334,390 shares, shared voting power with respect to 5,546,627 shares, sole dispositive power with respect to 2,334,390 shares and shared dispositive power with respect to 5,546,627 shares.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Except as disclosed herein, no director, executive officer, stockholder holding at least 5% of shares of our common stock, or any family member
thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the incorporation of Millrose, in which the amount involved in the transaction exceeds the lesser of $120,000 or one percent (1%) of the
average of our total assets at the year-end for the last two completed fiscal years.
Transactions with our
Manager
The Manager is an affiliate and wholly-owned subsidiary of Kennedy Lewis. Kennedy Lewis and its affiliates provide structured
capital solutions to publicly traded and private U.S. home builders for financing the acquisition of entitled land and the completion of Horizontal Development. This financing enables home builders to improve their capital efficiency by acquiring
finished homesites on a just in time basis at the start of home construction, thereby reducing the home builders capital outlay and improving project level returns. Please see below for a description of the contractual relationship
that governs the relationship between Millrose and our Manager.
Management Agreement
On the Distribution Date, Millrose and KL, as our Manager, entered into the Management Agreement. The Management Agreement requires the Manager
to manage Millroses and its subsidiaries assets and day-to-day operations, subject to the supervision of the Board.
Pursuant to the terms of the Management Agreement, the Manager is responsible for, among other things, the acquisition, management and
disposition of land assets and properties, compliance with laws and regulations, including as a public company, performing services and activities relating to the HOPPR and ensuring compliance by Millrose with its responsibilities and
obligations under the Lennar Agreements. In addition, the Manager is required to provide Millrose with sufficiently experienced and qualified personnel to perform all services, including officers of Millrose and its subsidiaries. Further, the
Management Agreement includes a policy governing the allocation of investment opportunities not involving Lennar between Millrose and certain affiliates of Kennedy Lewis.
Pursuant to the Management Agreement, Millrose pays the Manager a management fee in an amount equal to 1.25% per annum of Tangible Assets (as
defined in the Management Agreement) or 0.3125% per quarter to be calculated as set forth in the Management Agreement. The Management Fee is due and payable quarterly in advance as of the first day of each quarter. In addition, except for certain
reimbursable expenses, all expenses incurred by Millrose and its subsidiaries in the ordinary course of business, including all Operating Expenses (as defined in the Management Agreement), will be paid for by the Manager and covered under the
Management Fee.
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The Management Agreement has an Initial Term of three years and will be automatically
renewed for a one-year term on each anniversary date thereafter, unless earlier terminated or not renewed in accordance with the termination provisions of the Management Agreement, including, among other
grounds, unsatisfactory performance by the Manager that is materially detrimental to Millrose and the Manager not presenting to the Board any candidates to succeed the Manager or the Key Men (as defined below), as applicable, for consideration
within 60 calendar days. In the event of termination without cause, Millrose will pay the Manager a termination fee, as calculated in accordance with the Management Agreement. The Management Agreement also contains indemnification provisions by
Millrose for the benefit of the Manager and its affiliates and by the Manager for the benefit of Millrose and its subsidiaries in certain circumstances.
In addition, the Management Agreement also includes a policy governing the allocation of investment opportunities not involving Lennar between
Millrose and certain affiliates of Kennedy Lewis. Kennedy Lewis launched a Land Banking strategy in June 2021. Certain entities managed by affiliates of Kennedy Lewis are currently actively allocating capital in Land Banking: Fund III and KLRES.
Fund III is advised by Kennedy Lewis Management LP and KLRES is advised by Kennedy Lewis Residential Property Income Advisors LLC, an affiliate and parent company of KL.
Under the Allocation Policy, the Manager will adhere to certain guidelines when allocating Land Banking investments not involving Lennar
between Millrose, Fund III and KLRES during their respective investment periods, which may mean that certain Land Banking opportunities that would be advantageous for Millrose may instead be allocated to another entity advised by Kennedy Lewis.
During the time that KL serves as the Manager of Millrose, transactions with Other Customers that are directed by Lennar or others to
Millrose, or that specifically request to engage in Land Banking with Millrose, including any follow-on transactions with such customers, KL will adhere to that preference and will direct 100% of the
investment opportunity to Millrose, provided that Millrose has Available Capital (as defined in the Allocation Policy). Certain investment opportunities directly related to existing land banking investments of Kennedy Lewis or transactions with
Other Customers that specifically request in writing not to engage with Millrose will be presented to Fund III and KLRES or through other KL vehicles. For all other transactions with Other Customers, KL will adhere to the allocation procedures in
the Allocation Policy, which include assessing the entities suitable to accept an investment opportunity based on certain allocation considerations. Investment opportunities that are deemed appropriate for Millrose as well as Fund III and KLRES will
be allocated on a rotation basis, such that Millrose will receive every other investment opportunity that is appropriate for Millrose, Fund III and KLRES.
Additionally, the Allocation Policy restricts Kennedy Lewis and its affiliates from raising funds, or engaging anybody else to raise funds for
any entity or otherwise to provide Land Banking or any similar form of real estate financing, other than for Millrose or a subsidiary of Millrose, without consent of the Board, subject to certain exceptions.
The foregoing description of the Management Agreement is not complete and is qualified in its entirety by reference to the Management
Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.1 and is hereby incorporated by reference.
Transactions with Lennar
Lennar owns
approximately 20% of the outstanding shares of Millroses common stock in the form of Class A common stock. Lennar will not exercise its voting rights with respect to this stock for as long as it retains the shares, and Lennar expects to
dispose of this stock through a subsequent spinoff, split-off, public offering, private sale or any combination of these potential transactions. Millrose has not had any historical operations, business or
record of financial performance (apart from what has been allocated to the Predecessor Millrose Business by Lennar). Please see below for a description of the contractual relationships that govern the relationship between Millrose and Lennar.
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Founders Rights Agreement
On the Distribution Date, Millrose and U.S. Home, Lennar Homes Holding, LLC, a subsidiary of Lennar, and CalAtlantic Group, LLC, a subsidiary
of Lennar (together, the Lennar Parties), entered into the Founders Rights Agreement pursuant to which U.S. Home maintains certain rights and benefits set forth therein that are exclusive to U.S. Home and its affiliates and may not
be granted to any other person by Millrose without the written consent of U.S. Home.
Pursuant to the Founders Rights Agreement,
until such time as the aggregate value of all cash and capital assets contributed by U.S. Home and held at a given time by Millrose and its subsidiaries is less than 10% of their total assets, and remains continuously below such 10% threshold for
six consecutive months (such event, a Sunset Threshold Event), in the event the Management Agreement is terminated for any reason or no reason, including if Millrose terminates the Manager, if KL resigns as Manager or if the Manager
assigns the Managers interest in the Management Agreement in violation thereof, U.S. Home has the right to consent or withhold consent to Millroses selection of a new manager and/or execution of any successor Management Agreement, which
consent may not be unreasonably withheld or conditioned. Upon receipt of notice that the Manager intends to terminate the Management Agreement, or upon Millroses determination to replace the Manager, Millrose will promptly notify U.S. Home
thereof. Millrose will present to U.S. Home one or more replacement manager candidates and/or a draft successor management agreement, and U.S. Home will have ten business days to object to such candidate and/or draft. U.S. Homes failure to
object within the ten-business day period will be deemed an approval of the candidate(s) and/or draft, as applicable.
The Founders Rights Agreement also provides that, until the occurrence of a Sunset Threshold Event, in the event that (i) both
David K. Chene and Darren L. Richman (collectively, the Key Men) cease to exercise control over the management or the decision-making process at Kennedy Lewis, (ii) both Key Men cease to exercise direct or indirect control over the
management of Millrose or (iii) either Kennedy Lewis and/or either Key Man transfers any membership interests of 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 acquiring and developing homesites in the United States, U.S. Home will have the right to consent to the replacement(s) for Mr. Chene and/or Mr. Richman (the Management Succession Consent Right).
Within ten days of the date on which the Manager has reason to believe that there will be a Management Change of Control within the following 90 days, Millrose will notify U.S. Home of such development. Promptly upon Millroses receipt of
candidate successors to replace Mr. Chene and/or Mr. Richman from the Manager, Millrose will provide to U.S. Home the relevant background information about such candidates. U.S. Home will have ten business days to evaluate the candidate(s)
and approve or reject such candidate(s). U.S. Homes failure to respond within the ten-business day period will be deemed an approval of the candidate(s).
The Founders Rights Agreement further provides 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 the Distribution Date to any Other Customer in exchange for Future Property Assets (i.e., any future Homesites, prospective Homesites, properties or other
related land assets that Millrose may acquire with and pursuant to its arrangements with its customers, including U.S. Home and Other Customers) in a transaction with an aggregate value in excess of $500 million at a price per share lower than
the price per share received by U.S. Home in exchange for the contribution of the Initial Founder Assets (as defined in the Founders Rights Agreement) (each, a Subsequent Bulk Assets Contribution), Millrose will issue an additional
number of shares of Class A common stock to Millrose stockholders (the Additional Equity Issuance) equal to the number of additional shares the Lennar stockholders that received common stock on the Distribution Date would have
received if the Distribution had been executed at the same price per share as what the Other Customer received in connection with the Subsequent Bulk Assets Contribution (such right, the Effective Equity Price Protection Right). The
Additional Equity Issuance will be calculated as set forth in the Founders Rights Agreement.
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Pursuant to the Founders Rights Agreement, U.S. Home has a Capital Priority
Right which it may exercise (i) on the first day of the month immediately following the one-year anniversary of the Distribution Date; and (ii) thereafter, every three months on a designated
date (each, a Reservation Date). On each Reservation Date, U.S. Home may reserve an amount up to the Priority Amount (as defined in the Founders Rights Agreement) for its activities pursuant to the Master Program Agreement, the
Master Option Agreement, the Master Construction Agreement and any Multiparty Cross Agreement (collectively, the Program Documents) during the three-month period until the next Reservation Date (each such period, a Reservation
Period) in accordance with the provisions set forth in the Founders Rights Agreement. The Capital Priority Right provides U.S. Home with an evergreen right to reserve for a certain period of time a certain amount of Millroses
available capital exclusively for financing Future Property Asset acquisitions and land development activities (including the installation of all necessary infrastructure required to build homes, including drainage, sewage, water lines, roads,
sidewalks, utility lines, grading, landscaping and, in certain cases, the construction of recreational facilities, common area elements and other amenities) for U.S. Home, which U.S. Home will lose if it does not use it
during the Reservation Period, subject to certain conditions.
In the event Millrose fails to convey any Homesite(s) to U.S. Home or its
affiliates, where U.S. Home (or its affiliate) is willing to pay the takedown price pursuant to the applicable Takedown Schedule of any Purchase Option, and such failure persists uncured for ten days following notice from U.S. Home that Millrose has
failed to convey the subject Homesite accordingly (such failure to convey, a Conveyance Default), U.S. Home has an Enforcement Right to compel Millrose to sell U.S. Home the Homesite(s), which will be automatically and immediately
available without the need for any court order or other third party action. If there is a Conveyance Default, U.S. Home may stop payment on all Monthly Option Payments (as defined below) with respect to all properties subject to any Program between
U.S. Home and Millrose. The Founders Rights Agreement also provides for a dispute resolution mechanism.
If Millrose (through its
subsidiaries) enters into any HOPPR or other arrangements with any individual or entity that allows for option payments (or payments substantially similar to Monthly Option Payments) at a rate that is lower than U.S. Homes (or its
affiliates) Applicable Rate for Future Property Assets (any such event, an Applicable Rate Adjustment Event), U.S. Home will have the right to have its Applicable Rate commensurately adjusted for all new Future Property Assets
acquired, or with respect to which an acquisition process has been initiated, within 180 days following the occurrence of the Applicable Rate Adjustment Event to match the lower rate agreed upon by the relevant Millrose and the third party;
provided, however, that within 18 months of the date of the Distribution, Millrose may issue additional shares of Class A common stock (or any other equity securities in a manner consistent with its charter) to any Other Customer in exchange
for Future Property Assets only if such transaction includes an option rate equal to or higher than the lower of (i) 9.5% and (ii) the Applicable Rate plus 1%.
Until the occurrence of a Sunset Threshold Event, 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 without the prior written consent of U.S. Home. In addition, without the express written consent of U.S.
Home, Millrose and its affiliates may not mortgage, pledge, hypothecate or otherwise encumber one or more residential properties in any collateralized financing arrangement, if any other property of Millrose subject to any customer right or option
to purchase is also pledged as collateral in such financing.
In addition to U.S. Homes ability to designate two Pause
Periods pursuant to the Master Option Agreement, U.S. Home also has a Pause Period Designation Right pursuant to the Founders Rights Agreement to unilaterally elect to designate a pause period of up to six months in its sole
discretion at any time with respect to any Property, during which time all takedown and construction deadlines for such Property will be extended, no closings will occur, and no payments will be made by Millrose to the contractor under the
applicable construction agreement. However, in the event U.S. Home designates a Pause Period by exercising its Pause Period Designation Right, then U.S. Home will lose its Applicable Rate Adjustment Right for all new Future Property Assets until
there are no longer any U.S. Home properties subject to a Pause Period.
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In addition to the above-described rights, Lennar also has the Debt to Equity Ratio Limit
Right and Secured Financing Collateral Consent Right described in Part II, Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsDebt
The foregoing description of the Founders Rights Agreement is not complete and is qualified in its entirety by reference to the
Founders Rights Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.2 and is hereby incorporated by reference.
Registration Rights Agreement
On
the Distribution Date, Lennar and Millrose entered into the Registration Rights Agreement, pursuant to which Millrose agreed that, upon the exercise of Lennars demand registration rights, subject to certain limitations, Millrose must use its
reasonable best efforts to affect the registration of the Retained Shares. Millrose will be responsible for all registration expenses in connection with Millroses performance of its obligations under the registration rights provisions. The
Registration Rights Agreement contains customary indemnification and contribution provisions by Millrose for the benefit of Lennar (including its directors and officers) and, in limited situations, by Lennar for the benefit of Millrose (including
its directors and officers) with respect to the information provided by Lennar included in any registration statement, prospectus or related document.
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the
Registration Rights Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.3 and is hereby incorporated by reference.
HOPPR License Agreement
On
the Distribution Date, Lennar-Millrose HOPPR, LLC, a subsidiary of Lennar (the Sublicensor), and Millrose Holdings, entered into the HOPPR License Agreement, pursuant to which the Sublicensor granted to Millrose Holdings a non-exclusive, worldwide, royalty-free, non-transferrable license to use the HOPPR and HOPPR Mark (as defined in the HOPPR License Agreement) (collectively,
the Licensed IP) solely for Millrose Holdings and its affiliates internal business purposes. Millrose Holdings will also have the right to use any related intellectual property that may supplement the Licensed IP. As part of
the Licensed IP, Millrose Holdings will also be able to use the HOPPR trademark, including in marketing materials and other publications. The Manager is entitled to use Millroses HOPPR Rights license in connection with
the management and operation of Millrose. Millroses HOPPR Rights license will be perpetual and will have no termination date, subject to certain limited termination conditions.
The foregoing description of the HOPPR License Agreement is not complete and is qualified in its entirety by reference to the
HOPPR License Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.4 and is hereby incorporated by reference.
Master Program Agreement
On the
Distribution Date, Millrose and U.S. Home, Lennar Homes Holding and CalAtlantic entered into the Master Program Agreement.
Under the
Master Program Agreement, and subject to the terms and conditions set forth therein, the Transferred Assets, Supplemental Transferred Assets (each as defined below) and Future Property Assets are or will be admitted to the Program. Millrose and its
affiliates, including Millrose Holdings (together with Millrose, the Millrose Entities), and their respective subsidiaries and affiliates (together with Millrose and Millrose Holdings, the Millrose Parties) will acquire
residential land and related rights, contract with the Lennar Parties to complete various on-site and off-site related improvements, and grant such Lennar Party an
option to acquire homesites on such land in accordance with a pre-determined acquisition schedule and in conjunction with the HOPPR.
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Admitted Properties, as used in the Master Program Agreement, refers to the
Properties acquired by the Millrose Parties for the benefit of the Lennar Parties and admitted to the Program. These Admitted Properties include the properties Lennar previously conveyed to certain Lennar subsidiaries and contributed to Millrose
prior to the Distribution and the Supplemental Transferred Assets. The Master Program Agreement also sets out specified admission requirements for future Properties to be deemed Admitted Properties. These admission requirements include compliance
with the Program Criteria, and Lennar providing to the Millrose Parties a proposed project report meeting the Program Criteria and completion of due diligence by the Manager. Properties will be admitted into the Program commencing on the
Distribution Date until such time as the Lennar Parties and Millrose mutually agree in writing that Properties will no longer be admitted to the Program.
The Admitted Properties are grouped into pools with primary consideration given to diversity within pools across geographies, communities and
home types. As to any pool, Lennars Total Payment Obligations (as defined in the Master Program Agreement) for the Transferred Assets will not exceed $50 million and for any future Admitted Properties will not exceed $25 million.
In the event a Lennar Partys Purchase Options to acquire Homesites expire or are terminated prior to such Lennar Party acquiring
all of the Homesites on an Admitted Property, then within 20 days of such expiration or termination, Millrose will have the right to request that a Lennar Party enter into an agreement to build out homes on the unpurchased Homesites for a fee, and
the Lennar Parties will make a Lennar Party available to be engaged as a fee builder of homes, subject to the terms and conditions set forth in the Master Program Agreement.
Under the Master Program Agreement, Millrose has agreed, at Lennars request, to provide the Program to any residential home construction
or real estate development company in the United States in which any Lennar Party has any amount of ownership interest or contractual business relationship, subject to certain conditions, including such company meeting the Program Criteria and
Millrose having sufficient capital to finance such engagements.
The foregoing description of the Master Program Agreement is not complete
and is qualified in its entirety by reference to the Master Program Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.5 and is hereby incorporated by reference.
Master Option Agreement
On the
Distribution Date, U.S. Home, Lennar Homes Holding, CalAtlantic and the Millrose Entities entered into the Master Option Agreement. Under the Master Option Agreement and the applicable Project Addendum, the applicable Millrose Party will grant
Lennar an exclusive option to acquire the Homesites on each Admitted Property.
The term of each Purchase Option begins on the later of
(i) the date of the Master Option Agreement, (ii) the applicable Millrose Partys acquisition of such Admitted Property (if not already owned by the Millrose Party), and Lennars delivery of the Option deposit and (iii) the
execution of a Project Addendum for the applicable Admitted Property. The Option term ends on the final takedown date specified in the applicable Takedown Schedule, unless earlier terminated pursuant to the Master Option Agreement and subject to
extensions as provided in the applicable Project Addendum. The Lennar Parties may exercise a Purchase Option in accordance with the procedures set forth in the Master Option Agreement.
Under the Master Option Agreement and any applicable Project Addendum, a Lennar Party will acquire the Homesites according to a Takedown
Schedule. The Lennar Party may extend acquisition dates by up to four quarterly extensions beyond the date provided in the Takedown Schedule, provided notice is given five business days before the end of the preceding month. Extensions adjust
subsequent takedown timelines but require the Lennar Parties to meet the cumulative acquisition target set forth in the applicable Takedown Schedule. Lennar may accelerate takedowns of up to 50% of Homesites in a pool as of the date of the proposed
accelerated takedown or elect to purchase all remaining Homesites in bulk. Bulk purchases exceeding 50% of a pool require concurrent completion of all Homesites in that pool.
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Lennar may designate up to two Pause Periods of up to six months each under the Master
Option Agreement if the Burns Home Value Index for the metropolitan statistical area (MSA) in which the Property is located shows a seasonally adjusted home sale pricing decline in the MSA of 10% or more, or a public health emergency
occurs which does or is expected to materially and adversely impacts Lennars ability to construct, market and/or sell residences on an Admitted Property. Additionally, following expiration of the Pause Periods described in the foregoing
sentence, two additional Pause Periods of up to six months each may be elected during the term of an option agreement subject to Millrose Holdings approval. During Pause Periods, deadlines are extended, takedowns are paused and Lennar pays a
reduced Monthly Option Payment at 50% of the Applicable Rate for the applicable Property.
In consideration for the grant of the Purchase
Option, the applicable Lennar Party is required to make the following payments:
An initial deposit of 5% of projected total land acquisition and development costs for the Admitted Property
which shall be confirmed and set forth in the applicable Project Addendum.
A monthly option payment calculated on a daily basis based on:
Invested Capital, which is (a) the aggregate amounts properly paid by the Millrose Parties to the Lennar
Parties or other parties in connection with a Property pursuant to the Master Option Agreement, the Master Construction Agreement and any applicable Project Addendum, purchase agreement or nomination agreement, including, without limitation, the
acquisition cost of the Property and the progress payments made to improve the Property (but excluding any costs which expressly are not reimbursable to Millrose pursuant to such agreements), less (b)(i) the aggregate purchase price paid by the
Lennar Parties to the Millrose Parties for Homesites set forth on the Takedown Schedule, and (ii) any other payments or reimbursements paid by the Lennar Parties to the Owner Parties for such Property (including the initial deposit and any
additional deposits) other than this monthly option payment; provided that with respect to the Transferred Assets and the Supplemental Transferred Assets, the Allocated Value set forth in the applicable Project Addendum for such Property
shall be included in the Invested Capital for each such Property
multiplied by the Applicable Rate
divided by 360 days.
Additional deposits in certain specified circumstances, including prepayments if Millrose requires cash flow (up
to 5% of the takedown price) or option termination payments.
All expenses provided for in the Master Option Agreement otherwise payable or attributable to the applicable
Admitted Property which are due and payable during the Purchase Option term and all expenses related to maintenance, insurance and other obligations contained in the Master Option Agreement during the Purchase Option term.
The foregoing description of the Master Option Agreement is not complete and is qualified in its entirety by reference to the Master Option
Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.6 and is hereby incorporated by reference.
Master Construction Agreement
On
the Distribution Date, U.S. Home, Lennar Homes Holding, CalAtlantic and the Millrose Entities entered into the Master Construction Agreement . The Master Construction Agreement governs the applicable Lennar Partys obligation to perform
construction services in order to complete the Work. Work consists generally of the construction of certain roads, sidewalks, fencing, sewers, drainage curbs, gutters, grading, retaining walls, landscaping, water lines and utility lines within, and
adjacent to, the Homesites, and any physical improvements to common areas within the Property (excluding any improvements which are of a vertical nature and home construction). Except for Work to be performed by third parties, Lennar will be solely
responsible for and have
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control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work and be responsible to the Millrose Entities for any acts or omissions
of its employees, subcontractors and their agents and employees and all other persons performing portions of the Work. The Lennar Party must use commercially reasonable efforts to complete the Work by the completion date set forth in the applicable
Project Addendum.
The Millrose Entities will pay all costs actually incurred by the applicable Lennar Party in the performance of the
Work and its obligations under the Master Construction Agreement, up to the contract sum specified in the applicable budget specified in the Master Construction Agreement and applicable Project Addendum. The applicable Lennar Party is solely
responsible for any cost overruns unless a consultant determines otherwise. Consultant fees will be allocated to the party whose position is not upheld. The Millrose Entities will not be responsible for paying certain costs incurred in performing
the Work, including the Lennar Partys employee salaries, overhead, development fees, capital expenses, or costs resulting from the Lennar Partys knowing and willful misconduct and gross negligence.
The applicable Lennar Party will receive progress payments based on submitted applications and certificates. Final payment will be made when
(i) the Lennar Party achieves completion of the Work, (ii) a complete final application for payment is submitted, (iii) the Lennar Party has submitted acceptable evidence to the Millrose Entities of the receipt of any final inspection
and approval of the Work from all applicable authorities, (iv) if the applicable Option terminates prior to the Lennar Party having acquired all the Homesites, a soils compaction report is delivered, (v) if the Millrose Entities still own
unpurchased Homesites, the Millrose Entities have received a conditional lien waiver and release from the Lennar Party and certain subcontractors relating to all Work for which final payment is being made, an unconditional lien waiver and release
from the Lennar Party and certain subcontractors relating to all Work performed for which payments have previously been made and such other invoices or documentation as the Millrose Entities may reasonably request, provided, however, that in lieu of
such lien releases, the Lennar Party may instead deliver to the Millrose Entities a certificate confirming that the applicable contractors and/or subcontractor have been or will be paid and (vi) if the applicable Option terminates prior to
Lennar having acquired all of the Homesites, the Millrose Entities have received certified as-built plans pertaining to all improvements constructed in connection with the Work.
If the Millrose Entities breach the Master Construction Agreement by failing to pay, Lennar may offset amounts owed against its obligations
under the Master Option Agreement and applicable Project Addendum, exercise lien rights, pursue legal recourse against Owner to recover delinquent amounts due and owing to Lennar, and/or terminate the Master Construction Agreement. If a Lennar Party
breaches the Master Construction Agreement, the Millrose Entities may deduct costs for deficiencies, require the Lennar Party to complete the Work at its expense, or take over the site and complete the Work using other contractors.
The foregoing description of the Master Construction Agreement is not complete and is qualified in its entirety by reference to the Master
Construction Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.7 and is hereby incorporated by reference.
Multiparty Cross Agreement
On the
Distribution Date, certain Lennar Parties and certain Millrose Parties entered into (and from time to time, such parties will enter into) several Multiparty Cross Agreements (the Multiparty Cross Agreement), each in connection with the
establishment of a pool with respect to certain Admitted Properties pursuant to the Master Program Agreement, Master Option Agreement, Master Construction Agreement and the applicable Project Addendum.
Each Multiparty Cross Agreement establishes cross-termination rights for pools of Admitted Properties (the Pool Properties). In
the event of the termination of a Purchase Option with respect to a Pool Property for any reason other than as a result of a default by the Millrose Parties without the applicable Lennar Party acquiring all Homesites on such Pool Property, then the
applicable Millrose Party will have the right, but not the obligation, to
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terminate the Purchase Option with respect to any other Pool Property owned by such Millrose Party and recover from the Lennar Party. If the Purchase Option for a Pool Property has been
terminated due to the Lennar Partys default under the Master Option Agreement, then the Millrose Party will be entitled to pursue its rights and remedies under the Master Option Agreement, but the Lennar Party will not be deemed to be in
default with respect to any other Pool Properties.
If a Lennar Partys default under the Master Option Agreement with respect to a
Pool Property (i) cannot be cured by the payment of money owed to the Millrose Party in connection with such Property, (ii) is not within the Lennar Partys reasonable control to cure within the time period requirement under the
Master Option Agreement and (iii) is limited to a particular Pool Property and the applicable Millrose Party elects to terminate the Option with respect to such Admitted Property as a result of such default, such Lennar Party may elect to
consummate a bulk sale of the defaulted Property without being required to enter into a bulk sale with respect to any other Pool Property. This will resolve the default without triggering cross-termination rights for other Properties, and any
previously exercised cross termination rights will be nullified.
The foregoing description of the Multiparty Cross Agreements is not
complete and is qualified in its entirety by reference to the form of Multiparty Cross Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.8 and is hereby incorporated by reference.
Payment and Performance Guaranty
In connection with the Master Program Agreement, the Master Option Agreement, the Master Construction Agreement and any related Project
Addenda, on the Distribution Date, Millrose and Lennar entered into a payment and performance guaranty in favor of Millrose and its affiliates (for purposes of this section only, the Guaranty Owner Parties), under which Lennar
irrevocably and unconditionally guarantees (i) the full punctual payment when due of any payment obligations of any of Lennars divisions and subsidiaries to Millrose under the Master Program Agreement and the Master Option Agreement and
(ii) the full and punctual payment and performance of the payment and construction obligations of any of Lennars divisions and subsidiaries to the Guaranty Owner Parties under the Master Construction Agreement. If such obligations are not
paid, or with respect to the Master Construction Agreement performed, Lennar will make such payments or perform such obligations after written demand by Millrose to Lennar. The Guaranty is a guaranty of payment, and with respect to the Master
Construction Agreement of performance, and not merely a guaranty of collection or collectability.
The Guaranty is continuing, unlimited,
absolute and unconditional and survives the termination of the Master Program Agreement, the Master Option Agreement, the Master Construction Agreement and any related Project Addenda until (i) termination of any such documents pursuant to its
terms due to Millroses or any Guaranty Owner Partys default thereunder or (ii) Lennars obligations described above are fully and indefeasibly paid and performed.
The foregoing description of the Guaranty is not complete and is qualified in its entirety by reference to the Guaranty, a copy of which is
attached to this Form 10-K as Exhibit 10.15 and is hereby incorporated by reference.
Recognition,
Subordination and Non-Disturbance Agreement
On the Distribution Date, U.S. Home, Lennar
Homes Holding and CalAtlantic (for purposes of this section only, Builder), Millrose, Millrose Holdings and each Property LLC entered into the Recognition Agreement, pursuant to which Builder subordinates its rights, title, claims and
interests in, to and under the Master Option Agreement and Master Construction Agreement to the lien of the Mortgages and the Pledge and Security Agreement.
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Pursuant to the Recognition Agreement, Millrose has agreed, if Millrose acquires any
Property or collateral pledged under the Pledge and Security Agreement as a result of Millroses exercise of any remedies under the Promissory Note, Mortgages and Pledge and Security Agreement (for purposes of this section only, the Loan
Documents): (i) to perform Millrose Holdings obligations under the Loan Documents; (ii) to take no action that would prevent or be inconsistent with Builders exercise of its rights under the Recognition Agreement and the
Master Option Agreement and Master Construction Agreement and (iii) if requested by Builder, to (a) execute any documents that are to be signed by a Note Borrower, (b) release any Mortgage or security interest under the Pledge and
Security Agreement with respect to any common areas of streets created or dedicated in connection with the development of the Property and (c) subordinate any Mortgage or security interest under the Pledge and Security Agreement to any easement
or declaration granted or created in connection with the development of the Property. In addition, upon the consummation of a Closing (as defined in the Master Option Agreement) with respect to all or any portion of a Homesite or any closing of a
homesite that is part of a Property pursuant to an option agreement similar in nature to the Master Option Agreement, the estate granted by the Mortgage with respect to such Property will automatically terminate and be void.
Millrose has agreed to notify Builder at least ten business days before commencing a foreclosure with respect to a Mortgage or the pledge and
to send a notice to Builder within ten business days after such commencement granting Builder the right, which shall be exercisable for not less than 30 business days from the date of Millroses notice, to purchase Millrose Holdings
obligation to pay Millrose pursuant to the Promissory Note upon, and for no consideration other than, payments of all amounts due and owing by Millrose Holdings under the Promissory Note.
If a bankruptcy proceeding is commenced by or against Millrose Holdings, Millrose will not take action that would adversely affect
(i) Builders rights under the Recognition Agreement, (ii) in any material respect Builders rights under the Master Option Agreement or Master Construction Agreement or (iii) Builders right to assert a claim in
bankruptcy as a creditor or interested party, without Builders prior written consent.
The Recognition Agreement will terminate upon
the (a) full, final and indefeasible payment of all amounts due under the Loan Documents and (b) the satisfaction in full of all of Property LLCs obligations under the Master Option Agreement and Master Construction Agreement.
The foregoing description of the Recognition Agreement is not complete and is qualified in its entirety by reference to the Recognition
Agreement, a copy of which is attached to this Form 10-K as Exhibit 10.16 and is hereby incorporated by reference.
Rausch Letter Agreement
On
February 10, 2025, Millrose completed its acquisition of land assets consisting of approximately 24,000 Homesites through the acquisition of 100% of the outstanding stock of RCH Holdings, Inc. for approximately $876 million in cash, which
is net of option deposits funded by Lennar and other holdbacks. The Company funded the Supplemental Transferred Assets Transaction using cash on hand.
In connection with the Supplemental Transferred Assets Transaction, the Company entered into a letter agreement, dated as of February 6,
2025 (the Rausch Letter Agreement), with U.S. Home pursuant to which U.S. Home directed Millrose to, and Millrose agreed to (directly or indirectly), acquire the Supplemental Transferred Assets. The Supplemental Transferred Assets are
optioned to Lennar and are subject to the same representations and protections consistent with Transferred Assets.
The foregoing
description of the Rausch Letter Agreement is not complete and is qualified in its entirety by reference to the Rausch Letter Agreement, a copy of which is attached to this Form 10-K as Exhibit 2.1 and is
hereby incorporated by reference.
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Policy for Approval of Related Party Transactions
Our Board has adopted a related party transaction policy that sets forth our procedures for the identification, review, consideration and
approval or ratification for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or a person whom we know to
beneficially own more than 5% of our outstanding shares of common stock (or their immediate family members), each of whom we refer to as a related person, has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a related party
transaction, the related person must report the proposed related party transaction to our General Counsel to determine whether the transaction or relationship does, in fact, constitute a related party transaction. Under the policy, the
proposed related party transaction will be reviewed and approved by the Audit Committee of our Board after full disclosure of the related persons interest in the transaction and determination by our General Counsel that such transaction should
be reviewed. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the Audit Committee will review and, in its discretion, may ratify the related
party transaction. The policy will also permit the chair of the Audit Committee to review, and if deemed appropriate approve, proposed related party transactions that arise in between Audit Committee meetings, subject to ratification by the Audit
Committee at its next meeting. Any related party transactions that are ongoing in nature will be reviewed annually. No member of the Audit Committee will be permitted to participate in any consideration of a related person transaction with respect
to which that member or any of his or her immediate family is a related person.
A related party transaction to be reviewed under the
policy will be considered approved or ratified if it is authorized by the Audit Committee after full disclosure of the related persons interest in the transaction. As appropriate for the circumstances, the Audit Committee will review and
consider relevant factors, including:
the related persons interest in the related party transaction;
the approximate dollar amount involved in the related party transaction;
the approximate dollar amount of the related persons interest in the related party transaction without
regard to the amount of any profit or loss;
whether the related party transaction was or will be undertaken in the ordinary course of Millroses
business;
the business reasons for, and the potential benefits to, Millrose to enter into the related party transaction;
whether the terms of the related party transaction are arms-length
and in the ordinary course of Millroses business;
whether the related party transaction would impair the independence of an otherwise independent director;
whether the related party transaction would present an improper conflict of interest for any director or
executive officer of Millrose (or any subsidiary of Millrose), taking into account the size and expected term of the related party transaction, the direct or indirect nature of the related persons interest in the transaction, and the
feasibility of recusal to minimize the conflict of interest; and
other facts and circumstances that bear on whether the relationship serves the best interests of Millrose and its
stockholders.
Following the review, the Audit Committee will determine whether or not the transaction is fair,
reasonable and consistent with the related party transaction policy, and whether the transaction should be approved or ratified.
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The Audit Committee may approve or ratify the transaction only if the Audit Committee
determines that, under all of the circumstances, the transaction is in the best interests of Millrose (including that the terms are fair and reasonably consistent with market terms). Related party transactions entered into, but not approved or
ratified as required by the policy, will be subject to termination by Millrose.
The policy provides that, in the event there are any
transactions that may involve or require any compensation of executive officers to be paid directly by Millrose (and not by KL or Kennedy Lewis, as would otherwise be the case under the Management Agreement), any such compensation shall be reviewed
and approved by the Compensation Committee in the manner specified in its charter.
Director Independence
Our Board consists of five members, all of whom our Board has determined qualify as independent directors, according to the standards for
independence specified by the NYSE. We intend that at all times a majority of the members of our Board will be persons who are deemed to be independent of us under the standards specified by the NYSE and who our Board determines are independent of
Lennar under those standards. In addition, all the members of the Audit Committee and all the members of the Compensation Committee and Nominating and Corporate Governance Committee of our Board are independent under the NYSE and SEC standards of
independence.
Item 14. Principal Accounting Fees and Services
Set forth below is information relating to the aggregate fees billed by Deloitte & Touche LLP (Deloitte) for professional
services rendered for fiscal year 2024 as well as a description of each fee category. Due to the timing of the Spin-Off, a majority of the services presented below were approved by Lennars audit committee. After Millroses audit committee
was constituted following the Spin-Off, it approved $600,000 of the fees presented below.
Year ended
December 31,
2024
Year ended
December 31,
2023
Audit fees
$
2,848,565
$
925,000
Audit related fees
Tax fees
97,200
All other fees
Total
$
2,945,765
$
925,000
Deloittes professional fees are classified as follows:
Audit fees These are fees for professional services performed for the audit of our annual combined
financial statements, the required review of quarterly financial statements, registration statements and other procedures performed by independent auditors in order for them to form an opinion on our combined financial statements.
Audit-related fees These are fees for assurance and related services that traditionally are
performed by independent auditors that are reasonably related to the performance of the audit or review of the financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by
statute or regulation, internal control reviews, and consultation concerning financial accounting and reporting standards.
Tax fees These are fees for all professional services performed by professional staff in our
independent auditors tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning, and tax advice, including federal, state, and local issues. Services may also
include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state, and local tax issues related to due diligence.
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All other fees These are fees for any services not included in the above-described categories,
including assistance with internal audit plans and risk assessments.
Policy for the
Pre-Approval of Audit and Permissible Non-Audit Services
For the year ending December 31, 2025 and all future periods, the Audit Committee will annually review and
pre-approve the services that may be provided by the Companys independent registered public accounting firm without obtaining further specific pre-approval from
the Audit Committee. The Audit Committee also adopted a Pre-Approval Policy that contains a list of pre-approved services, which the Audit Committee may revise from time
to time, based on subsequent determinations. The Audit Committee has delegated pre-approval authority to the chairperson of the Audit Committee, or another specified member of the Audit Committee. The
chairperson of the Audit Committee or such specified member will report any pre-approval decisions to the Audit Committee at its next scheduled meeting.
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Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) (1) Financial Statements
Our
combined financial statements are included in Part II, Item 8 of this Form 10-K.
INDEX TO FINANCIAL STATEMENTS
Page
Millrose Properties, Inc. Audited Financial Statements
Report of Independent Registered Public Accounting Firm
123
Balance Sheets as of December 31, 2024 and June 2024
124
Notes to the Balance Sheets
125
Combined Audited Financial Statements of the Predecessor Business
Report of Independent Registered Public Accounting Firm
127
Combined Balance Sheets at December 31, 2024 and 2023
128
Combined Statements of Operations for the years ended December
31, 2024 and 2023
129
Combined Statements of Equity for the years ended December
31, 2024 and 2023
130
Combined Statements of Cash Flows for the years ended December
31, 2024 and 2023
131
Notes to the Combined Financial Statements
132
(a) (2) Financial Statement Schedules
All schedules have been omitted because they are either not applicable, not required or the information called for therein appears in the
combined financial statements or notes thereto.
(a) (3) Exhibits
Exhibit
Number
Description
2.1
Letter Agreement, dated February 6, 2025, by and between U.S. Home, LLC and Millrose Properties, Inc. (incorporated by reference
to Exhibit 2.1 to Millroses Current Report on Form 8-K filed with the SEC on February 10, 2025)
3.1
Articles of Amendment and Restatement of Millrose Properties, Inc., dated February
6, 2025 (incorporated by reference to Exhibit 3.1 to Millroses Current Report on Form 8-K filed with the SEC on February 7, 2025)
3.2
Amended and Restated Bylaws of Millrose Properties, Inc., dated February
7, 2025 (incorporated by reference to Exhibit 3.2 to Millroses Current Report on Form 8-K filed with the SEC on February 7, 2025)
4.1*
Description of Securities
10.1+
Management Agreement, dated February
7, 2025, by and between Millrose Properties, Inc. and Kennedy Lewis Land and Residential Advisors LLC (incorporated by reference to Exhibit 10.1 to Millroses Current Report on Form 8-K filed with the SEC on
February 7, 2025 )
10.2
Founders Rights Agreement, dated February
7, 2025, by and between Millrose Properties, Inc., U.S. Home, LLC, Lennar Homes Holding, LLC and CalAtlantic Group, LLC (incorporated by reference to Exhibit 10.2 to Millroses Current Report on Form 8-K filed
with the SEC on February 7, 2025)
10.3
Registration Rights Agreement, dated February
7, 2025, by and between Lennar Corporation and Millrose Properties, Inc (incorporated by reference to Exhibit 10.3 to Millroses Current Report on Form 8-K filed with the SEC on February 7,
2025)
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10.4
Sublicense Agreement, dated February
7, 2025, by and between Lennar-Millrose HOPPR, LLC and Millrose Properties Holdings, LLC (incorporated by reference to Exhibit 10.4 to Millroses Current Report on Form 8-K filed with the SEC on February 7,
2025)
10.5
Master Program Agreement, dated February
7, 2025, by and among Millrose Properties, Inc., U.S. Home, LLC, Lennar Homes Holding, LLC, and CalAtlantic Group, LLC (incorporated by reference to Exhibit 10.5 to Millroses Current Report on Form 8-K filed
with the SEC on February 7, 2025)
10.6
Master Option Agreement, dated February
7, 2025, by and among Millrose Properties, Inc., Millrose Properties Holdings, LLC, U.S. Home, LLC, Lennar Homes Holding, LLC, and CalAtlantic Group, LLC (incorporated by reference to Exhibit 10.6 to Millroses Current Report on Form 8-K filed with the SEC on February 7, 2025)
10.7
Master Construction Agreement, dated February
7, 2025, by and among Millrose Properties, Inc., Millrose Properties Holdings, LLC, U.S. Home, LLC, Lennar Homes Holding, LLC, and CalAtlantic Group, LLC (incorporated by reference to Exhibit 10.7 to Millroses Current Report on Form 8-K filed with the SEC on February 7, 2025)
10.8
Form of Multiparty Cross Agreement, dated February
7, 2025, by and among certain Lennar parties and certain Millrose parties (incorporated by reference to Exhibit 10.8 to Millroses Current Report on Form 8-K filed with the SEC on February 7,
2025)
10.9
Credit Agreement, dated February
7, 2025, by and among Millrose Properties, Inc., as borrower, JPMorgan Chase Bank, N.A., as a lender and as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.9 to Millroses Current Report on Form 8-K filed with the SEC on February 7, 2025)
10.10
Promissory Note, dated February
6, 2025, issued by Millrose Properties Holdings, LLC and certain of the Property LLCs, in favor of Millrose Properties, Inc (incorporated by reference to Exhibit 10.10 to Millroses Current Report on Form 8-K filed
with the SEC on February 7, 2025)
10.11
Form of Mortgage, dated February
6, 2025, by and between certain of the Property LLCs and Millrose Properties, Inc (incorporated by reference to Exhibit 10.11 to Millroses Current Report on Form 8-K filed with the SEC on February 7,
2025)
10.12
Pledge and Security Agreement, dated February
6, 2025, by and between Millrose Properties Holdings, LLC and Millrose Properties, Inc (incorporated by reference to Exhibit 10.12 to Millroses Current Report on Form 8-K filed with the SEC on February 7,
2025)
10.13
Payment and Performance Guaranty, dated February
7, 2025, by Lennar Corporation in favor of Millrose Properties, Inc. and each of its affiliates party thereto (incorporated by reference to Exhibit 10.13 to Millroses Current Report on Form 8-K filed with the
SEC on February 7, 2025)
10.14
Recognition, Subordination and Non-Disturbance Agreement, dated February
7, 2025, by and among U.S. Home, LLC, Lennar Homes Holding, LLC, CalAtlantic Group, LLC, Millrose Properties, Inc., Millrose Holdings, LLC and certain of the Property LLCs (incorporated by reference to Exhibit 10.14 to Millroses Current Report on
Form 8-K filed with the SEC on February 7, 2025)
10.15
Form of Indemnification Agreement (Directors and Officers) (incorporated by reference to Exhibit 10.15 to Millroses Current Report on
Form 8-K filed with the SEC on February 7, 2025)
10.16+
Millrose Properties, Inc. 2024 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.16 to Millroses Current Report on Form
8-K filed with the SEC on February 7, 2025)
19.1*
Insider Trading Policy
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Table of Contents
19.2*
Supplemental Insider Trading Policy
21.1*
Subsidiaries of Millrose
23.1*
Consent of Deloitte & Touche LLP, an independent registered public accounting firm (Predecessor Millrose Business)
23.2*
Consent of Deloitte & Touche LLP, an independent registered public accounting firm (Millrose Properties, Inc.)
31.1*
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1*
Erroneously Awarded Compensation Policy
*
Filed herewith.
**
Furnished herewith.
+
Identifies management contracts, compensatory plans or arrangements.
Certain schedules, annexes and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit upon the request of the SEC.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
MILLROSE PROPERTIES, INC.
By:
/s/ Garett Rosenblum
Name:
Garett Rosenblum
Title:
Chief Financial Officer and Treasurer
Date: March 31, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Darren L. Richman
Darren L. Richman
Chief Executive Officer and President (Principal Executive Officer)
March 31, 2025
/s/ Garett Rosenblum
Garett Rosenblum
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
March 31, 2025
/s/ Carlos A. Migoya
Carlos A. Migoya
Director
March 31, 2025
/s/ Patrick Bartels
Patrick Bartels
Director
March 31, 2025
/s/ Matthew B. Gorson
Matthew B. Gorson
Director
March 31, 2025
/s/ Kathleen B. Lynch
Kathleen B. Lynch
Director
March 31, 2025
/s/ M. Alison Mincey
M. Alison Mincey
Director
March 31, 2025
169