Lennar’s land bank spinoff Millrose bought 1,200 single-family rentals 

Millrose Properties purchased single-family homes from Lennar with plans to run them as rentals, a disclosure that comes amid a lawsuit over the matter. 

In its third quarter report, publicly traded Millrose said it bought 1,233 completed homes from Miami-based Lennar, which spun off Millrose into an independent entity last year. 

The properties are across 18 states, and the deal was for an aggregate cost basis of about $333 million, funded with roughly $120 million of balance sheet capital and $213 million of limited-recourse financing, according to a Millrose news release. 

Millrose was originally spun off as a “homesite option purchase platform” that “engages in land purchases, horizontal development and homesite option purchase arrangements for Lennar” and potentially others, according to a Lennar news release issued last year.

But investors Leon and Sylvia Rubenstein sued Millrose this month in federal court in South Florida, alleging that they were misled about Millrose’s endeavors, including that it would purchase homes. The plaintiffs seek class action status for all investors who purchased Millrose stock from Feb. 7, 2025, the day Lennar completed the Millrose spinoff, until Oct. 2. The complaint alleges that previous representations were that Millrose won’t lease out properties to tenants. 

The lawsuit largely hinges on an investigative report at outlet Hunterbrook Media, which on Oct. 2 reported that Millrose had purchased $200 million worth of homes from Lennar and rented out the properties at a loss, despite its representations to investors. 

Hunterbrook isn’t a traditional news outlet, as it has a financial stake in the outcome. Its affiliate, Hunterbrook Capital, makes investments that can unlock profits from Hunterbrook Media’s reporting. Its Millrose piece disclosed that Hunterbrook Capital was shorting Lennar and Millrose stock, while it also was long “a basket of comparable securities,” meaning it stood to financially gain in a drop in Lennar and Millrose stock. 

The Rubensteins’ complaint reproduces the entire Hunterbrook Media report on Millrose across eight pages in the 35-page complaint. 

According to the Rubensteins’ complaint, Millrose’s share price fell by $2.10, or 8.5 percent, closing at $22.51 on Oct. 5, alleging that due to the “the precipitous decline in the market value of the company’s securities,” investors “suffered significant losses and damages.” The complaint also alleges that due to Millrose’s misrepresentations, its stock previously traded at an inflated price. 

The lawsuit also is against CEO Darren Richman and CFO Garrett Rosenblum. 

Millrose didn’t immediately return a request for comment. 

“The acquisition was underwritten as a standalone rental investment, independent of any future path-to-homeownership initiative,” Millrose said in its financial filings. 

Miami-based Lennar, led by Stuart Miller, whose late father started the firm in the 1970s, is the nation’s second-largest homebuilder and the largest in south Miami-Dade County. 

Its near machine-like development strategy is largely rooted in holding land off its books by relying on land banks. It’s a common way of doing business by homebuilders because it allows them to free up cash to continue building, while they have purchase option agreements to buy land once they are ready to develop it. 

Millrose’s purchase of finished Lennar homes came as Lennar has felt the sting from slower home sales amid elevated mortgage rates, and the recent increase of the benchmark interest rate. According to Lennar’s third quarter earnings report, revenues from home sales hit $7.7 billion, or 6 percent down from $8.2 billion in the third quarter of last year, primarily due to a 3 percent decrease in the average home sale price and a 3 percent drop in the number of delivered homes. 

Miller holds about 42 percent of Millrose voting power. 

Read more

Arbor’s short sellers yet to get last laugh 

Nation’s biggest builders hit with wave of defect claims