Shareholders have sued Lennar spinoff Millrose Properties, alleging they were misled, in a complaint that hinges heavily on reporting by a news outlet whose investment affiliate was short on Millrose and Lennar stock, positioning it to benefit from declines in their share prices.
Lennar, the second largest homebuilder nationwide and a Miami homegrown company, has long relied on land banks to carry development sites off its balance sheet and have other entities hold the properties until Lennar is ready to build. The strategy, which is common among homebuilders, frees up their cash to keep building.
In a nod to this strategy, Lennar last year spun off Millrose as a land bank.
It officially announced it 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 Lennar’s press release. It also made several representations it won’t lease out properties to tenants, according to the complaint.
Despite this, Millrose purchased $200 million worth of homes from Lennar and rented out the properties at a loss, according to the lawsuit, which based this on a Hunterbrook Media report.
Leon and Sylvia Rubenstein filed the lawsuit against Millrose, CEO Darren Richman and CFO Garrett Rosenblum on Friday in Florida’s southern district, raising claims under the Securities Exchange Act. They are seeking class action status for investors who bought Millrose stock from Feb. 7, 2025, the day Lennar completed the Millrose spinoff, until Oct. 2, when Hunterbrook Media published its report.
The lawsuit reproduces the entirety of Hunterbrook’s article across eight pages of the 35-page complaint. The outlet reported that it identified more than 700 homes Millrose bought from Lennar across more than 50 counties in 15 states, including some purchased right at the end of the fiscal quarter, with Lennar subsequently beating the bottom of its delivery forecast by 340 homes, and that Millrose appears to be paying about 13 percent more for homes than individuals buying in the same communities, according to the article.
The Hunterbrook report says it’s based on property and deed records, SEC filings, Zillow and other property market data, field reporting and Hunterbrook’s own analysis of data.
Still, the organization isn’t a traditional news outlet and has a financial stake in the outcome. Launched in 2023, Hunterbrook is a hybrid media and investment organization that monetizes its reporting, with Hunterbrook Media being the accountability journalism division, while Hunterbrook Capital is the investment arm that trades based on newsroom reporting, including by shorting stocks.
The Millrose piece disclosed that at the time of its publishing, Hunterbrook Capital was shorting Lennar and Millrose stock, while it also was long “a basket of comparable securities.”
This essentially means that Hunterbrook Capital stands to financially gain from a drop in Lennar and Millrose stock.
Hunterbrook’s own website explains its business model. “We believe that good reporting can be good business — when you monetize insights rather than eyeballs, and align profits with accuracy,” adding that it’s committed to accuracy and does not “lie, embellish, or exaggerate.”
“The experiment we’re running is very specifically ‘Can you do investigations into companies that are committing wrongdoing, and can you break news in parts of the world that have been left behind by mainstream outlets — and do it profitably?’” Hunterbrook co-founder Sam Koppelman told The New Yorker in a 2024 profile.
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.
Since the Hunterbrook piece was published, multiple plaintiffs law firms have announced they are starting investigations into Millrose, calling on shareholders to reach out to the law firms.
Hunterbrook reported that Millrose and three Lennar subsidiaries amended their agreements on Aug. 27 to add “completed single family homes” as a new asset category, and say that Millrose would buy and rent out these properties, contrary to its initial SEC disclosures, according to the report.
The Rubensteins’ complaint also mirrors Hunterbrook’s reporting on the ties between Lennar and Millrose in writing that: Stuart Miller, CEO and executive chairman of Lennar, holds about 42 percent of Millrose voting power, according to the suit.
“As the Hunterbrook Report revealed, the self-interested transaction between Millrose and Lennar came at a time when Lennar’s third-quarter net earnings fell by 51 percent compared to the same quarter last year,” the suit says. “Home sales revenue fell 6 percent, new orders dropped 9 percent, and the average selling price slipped to $372,000 as incentives averaged about 12 percent of purchase price.”
Lennar, Millrose, the Rubensteins’ attorneys and Hunterbrook didn’t return requests for comment.
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