Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2026

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial statements. Accordingly, certain footnotes or other financial information normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2025.

The comparative information for the three and six months ended June 30, 2025 includes results of the Predecessor Millrose Business prior to the Spin-Off completed on February 7, 2025. Amounts presented for the Predecessor Millrose Business have been derived from the accounting records of Lennar and prepared under the legal-entity carve-out method, as described in the Company’s Form 10-K for the year ended December 31, 2025. The condensed consolidated financial statements after the Spin-Off include the accounts of Millrose and its subsidiaries, including Millrose Holdings and other subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Subsequent to the issuance of the Company’s Form 10-Q for the second quarter 2025, the Company corrected its previously issued Statements of Cash Flows presentation for the Sale of homesites under option contracts and other related assets. As a result, the Company has revised the prior-year comparative information presented herein to capture the impact to the six months ended June 30, 2025. The cash flows provided by operating activities have been increased and net cash provided by investing activities have been decreased by $1.480 billion, respectively. Management believes that the amount is immaterial to its previously issued condensed consolidated financial statements.

Segment and Geographic Information

Prior to the Spin-Off, the Predecessor Millrose Business did not operate as a separate reportable segment. Following the Spin-Off, the Company operates and derives revenue primarily from its portfolio of homesites under option contracts. The Company also earns interest income on development loans secured by residential property.

As of June 30, 2026, the Company’s operations were conducted entirely in the United States with properties geographically located across 30 states. The Chief Executive Officer serves as the Company’s Chief Operating Decision Maker (the “CODM”) and evaluates performance and resource allocation on a portfolio basis. Additionally, the Company does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company has a single operating and reportable segment (the “Reporting Segment”) for disclosure purposes in accordance with GAAP.

The CODM evaluates the performance of the Reporting Segment by analyzing the Company's condensed consolidated financial statements. Net income attributable to Millrose, as presented on the Company’s condensed consolidated statements of operations, is the primary metric utilized by the CODM to assess the Reporting Segment’s performance and to allocate resources. Total assets, as presented on the Company’s condensed consolidated balance sheets, is used to measure the Reporting Segment’s assets.

The Company monitors major counterparties to assess potential risks to its financial position. For the three months ended June 30, 2026, Lennar represented $141.5 million, or 72%, of total Company revenues and 72% of total Company option fee revenues. For the six months ended June 30, 2026, Lennar represented $281.8 million, or 72%, of total Company revenues and 74% of total Company option fee revenues.

The Company continuously monitors operations for any changes that may impact segment reporting as required under ASC 280 Segment Reporting. No such changes occurred during the periods presented.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The allowance for credit losses on development loan receivables and homesites under option contracts is a critical accounting estimate developed using a weighted average remaining maturity (“WARM”) methodology in accordance with ASC 326 Financial Instruments – Credit Losses. This methodology requires significant judgment in determining the annual charge-off rate, expected cash flows, and other qualitative adjustments. Additionally, determining whether option agreements should be accounted for under ASC 842 Leases requires the Company to apply significant judgment in evaluating the elements of control and economic benefits of the related assets.

The Company believes the estimates and assumptions underlying its condensed consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2026. Actual results could differ from those estimates.

Cash

The Company considers all investments with an original maturity of three months or less to be cash and cash equivalents. Cash is recorded at cost, which approximates their fair values due to the short maturity period. As of June 30, 2026, cash was $34.2 million and consisted of highly liquid deposit accounts. The Company held no cash equivalents or restricted cash balances as of June 30, 2026.

Homesites Under Option Contracts

The Company enters into option agreements that grant homebuilders the right to direct the planning, use, and development of homesites subject to the option contracts. The Company evaluates its homesite option contracts at inception to determine if they contain a lease as defined under ASC 842. If the counterparty obtains substantially all of the economic benefits from use of the asset and has elements of control of the optioned assets, the Company accounts for homesites under option contracts in accordance with ASC 842. If the purchase options are reasonably certain of being exercised, the Company accounts for option fee contracts as sale-type leases under ASC 842.

Homesites under option contracts are recorded based on the Company's capital funded under the option contracts, which includes the land acquisition costs, qualifying development costs and other directly attributable costs. Option fee income is recognized over the term of the contract using an effective interest yield, which represents the effective interest component on the sales-type leases. Changes in monthly option fees due to reimbursable development costs, changes in takedown timing or volume, or other contractual adjustments are recognized prospectively through an updated effective interest yield over the term of the option contract. When a counterparty completes a takedown and homesites are transferred in accordance with the option contract, the Company derecognizes the related carrying amount from the condensed consolidated balance sheets.

The Company evaluates the contractual right to receive future payments under option contracts for expected credit losses in accordance with ASC 326. The Company uses a WARM methodology, which applies an annual loss rate to the estimated remaining life of the related contract balance and is adjusted for expected cash flows and other qualitative factors which include

the counterparties' payment performance, delinquencies or defaults since inception, historical charge off rates for residential housing, and cross-collateralization features across certain counterparty arrangements. The Company also considers the credit quality of its most significant counterparties.

See Note 4. Homesites Under Option Contracts for additional information.

Development Loan Income

The Company earns interest income on the outstanding loan balance of development loans secured by residential property. Development loan income is recorded in accordance with ASC 310 Receivables. The Company records the revenue on a monthly basis as the interest is earned. All interest earned is paid-in-kind (“PIK”).

For the three and six months ended June 30, 2026, development loan income was $1.5 million and $11.1 million, respectively.

Development Loan Receivables, net

Development loan receivables, net are accounted for in accordance with ASC 310. These amounts include principal amounts due on development loans and the related interest receivable. Development loans are recorded at their amortized cost basis, representing the principal portion and capitalized PIK interest, net of principal payments and the allowance for credit losses.

The Company records an allowance for credit losses in accordance with ASC 326. The Company uses a WARM methodology which applies an annual charge-off rate to the estimated remaining life of development loans, adjusted for expected cash flows. The historical baseline is further adjusted for qualitative factors, including counterparties' consistent payment performance and broader market conditions affecting residential development activity. The Company includes accrued PIK interest in the amortized cost basis of the development loans for purposes of calculating the allowance for credit losses. As of June 30, 2026, the Company recorded an allowance for credit losses of $0.1 million in the condensed consolidated balance sheets as an estimate of potential future losses. During the second quarter of 2026, the Company recorded a $0.9 million reduction to its allowance for credit losses related to the payoff of a development loan with an unaffiliated third party.

Development loan receivables as of June 30, 2026 and December 31, 2025 were as follows:


	June 30,			December 31,
(in thousands)	2026			2025
Development loan principal receivables	$	49,293		$	323,308
Interest receivable paid-in-kind for development loans		617			6,696
Allowance for credit losses		(98	)		(1,005	)
Total development loan receivables, net	$	49,812		$	328,999

The following table summarizes the activity in the Company's development loan receivables, net and the associated allowance for credit losses, which represents the Company's valuation account for these financial assets, for the six months ended June 30, 2026:


	Six months ended June 30,
(in thousands)	2026
Development Loan Receivables (Gross)
Balance at December 31, 2025	$	330,004
Investments in development loans		19,566
Paydowns of development loans (1)		(310,742	)
Interest income on development loans		11,082
Ending gross balance at June 30, 2026	$	49,910
Allowance for Credit Losses
Balance at December 31, 2025	$	1,005
Adjustment: Provision for (benefit from) credit loss expense (2)		(907	)
Ending allowance for credit losses at June 30, 2026		98
Development loan receivables, net at June 30, 2026	$	49,812

(1)

Includes payoff of $284.2 million on April 1, 2026 related to a development loan with an unaffiliated third party.

(2)

Includes $0.9 million reduction to the Company’s allowance for credit losses related to the payoff of a development loan with an unaffiliated third party.

Builder Deposits

Builder deposits are option deposit payments received from counterparties under the Company’s option contracts. The Company records a liability for these deposits at the time of the counterparties’ deposit payments. When the counterparties exercise their purchase option and acquire the finished homesite, the builder deposits are applied to the total takedown price owed by the counterparty. The liability is reduced as takedown payments are made and when the corresponding homesites under option contracts are derecognized from the condensed consolidated balance sheets. If counterparties do not exercise their purchase options, the deposit is forfeited as per the terms of the option contracts and recorded as income by the Company. For the three and six months ended June 30, 2026, there were no option agreements that were terminated, forfeited, or expired without exercise. Accordingly, no income related to forfeited deposits was recognized by the Company during such periods.

The following roll forward summarizes the change in builder deposits for the six months ended June 30, 2026:


	Six months ended June 30,
(in thousands)	2026
Beginning balance as of December 31, 2025	$	927,004
Builder deposits, additions		146,231
Homesite takedowns, options exercised		(73,474	)
Total builder deposits	$	999,761

Debt Issuance and Financing Costs

The Company records debt issuance and financing costs in accordance with ASC 835 Interest.

Issuance costs for the DDTL Credit Facility (as defined below) and Senior Notes (as defined below) are recorded as a direct deduction of the carrying value of the debt liability and are classified as debt obligations, net in the Company’s condensed consolidated balance sheets. These costs are amortized to interest expense on a straight-line basis over the contractual life of the debt as it approximates the effective interest method. As of June 30, 2026, issuance costs recorded as a direct deduction of debt, net of accumulated amortization, were $39.3 million, of which $11.4 million related to the DDTL Credit Facility and $27.9 million related to the Senior Notes.

Financing costs for the Revolving Credit Facility (as defined below) are classified as other assets in the Company’s condensed consolidated balance sheets as the costs represent a future economic benefit which provides the Company access to capital over the contractual term. These costs are amortized to interest expense on a straight-line basis over the term of the Revolving Credit Facility as it approximates the effective interest method. As of June 30, 2026, financing costs recorded as other assets, net of accumulated amortization, were $5.3 million.

For additional information, see Note 8. Debt Obligations.

Development Guarantee Holdback Liability

The Company recorded a holdback liability related to a site improvement guarantee (the “Site Improvement Guarantee Amount”) owed to Rausch Coleman Companies, LLC (“Rausch”) pursuant to terms of the transaction documents for the acquisition of the Rausch land assets by the Company (the “Transaction Documents”). The Site Improvement Guarantee Amount is due within ten business days of the date that is the later of (i) two years following February 10, 2025, and (ii) the date on which development of 50% of certain assets subject to the Transaction Documents (the “Guaranteed Assets”) has been completed. The amount to be paid to Rausch pursuant to the Transaction Documents is the Site Improvement Guarantee Amount, less the aggregate amount by which actual development costs exceed the budgeted development costs for the Guaranteed Assets or such lesser amounts as may be designated in writing by Rausch. As of June 30, 2026 and December 31, 2025, the holdback liability was $100 million.

Management Fee Expense

Pursuant to the Management Agreement, the Company pays KL a management fee in an amount equal to 1.25% per annum (0.3125% per quarter) of Tangible Assets, as defined in the Management Agreement (the “Management Fee”). The Management Fee is due and payable quarterly in advance as of the first day of each quarter and is reviewed by the Company's Board of Directors (the “Board”).

Except for certain reimbursable expenses, all expenses incurred by Millrose and its subsidiaries in the ordinary course of business are covered under the Management Fee, including the costs of all administrative and operating functions and systems, office space and office equipment, public company expenses, expenses incurred in maintaining the Company’s REIT status, compensation and fees paid to officers, employees, directors, vendors, consultants, advisors, and other outside professionals.

All personnel are employed by KL or an affiliate of KL, and their salaries are paid by KL or the relevant affiliate of KL; therefore the Company does not record personnel-related expenses, including salaries, benefits, and share-based compensation for any employees. All cash compensation and fees paid to the Board are also paid by KL and covered by the Management Fee. The Management Fee does not cover certain offering expenses, rating agency fees, fees incurred for services in connection with extraordinary litigation and mergers and acquisitions and other events outside the Company’s ordinary course of business, and, in certain circumstances, costs associated with the ownership and maintenance of land.

The Management Fee for the three months ended June 30, 2026 and 2025 was $29.9 million and $22.0 million, respectively. The Management Fee for the six months ended June 30, 2026 and 2025 was $58.1 million and $34.1 million, respectively.

Stock-Based Compensation

On December 17, 2024, the Company’s sole stockholder at the time and its Board adopted the Millrose Properties, Inc. 2024 Omnibus Incentive Plan (the “2024 Incentive Plan”). The 2024 Incentive Plan authorizes the award of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. As of June 30, 2026, there were 44,320 underlying shares of Class A common stock associated with outstanding RSU awards under the 2024 Incentive Plan. As of June 30, 2026, 11,531,269 shares of Class A common stock were available for issuance under the 2024 Incentive Plan.

In accordance with ASC 718 Compensation- Stock Compensation, the Company accounts for stock-based compensation based on the grant date fair value and amortizes the costs on a straight-line basis over the vesting terms as stock-based compensation expense and as additional paid-in capital. See Note 12. Stock-Based Compensation for additional information.

Sales, General, and Administrative Expenses from Pre-Spin Period

Sales, general, and administrative expenses from pre-spin period are costs directly attributable to the Predecessor Millrose Business prior to the Spin-Off, and include pre-Spin-Off operating and employee compensation costs for dedicated regional and divisional land teams tasked with acquiring and developing the homesites Lennar transferred to Millrose in the Spin-Off. For the six months ended June 30, 2025, these expenses included an allocation for the period from January 1, 2025 through February 7, 2025 calculated as (i) the average daily expense allocated and recorded for the twelve months ended December 31, 2024, applied to (ii) days in the first quarter 2025 prior to the Spin-Off. Sales, general, and administrative expenses from pre-spin period were $25.0 million for the period of January 1, 2025 through February 7, 2025.

Income Taxes

The Company records income taxes using the asset and liability method set under ASC 740 Accounting for Income Taxes. Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss and tax credit carryforwards as applicable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the year in which the temporary differences are expected to be recovered or paid. The effect of the change in tax rates is recognized in earnings in the period when the changes are enacted. Interest related to unrecognized tax benefits is recognized in the condensed consolidated financial statements as a component of income tax expense.

Deferred tax assets are recognized to the extent that it is more likely than not that they will be realized. The Company reviews the potential realization of deferred tax assets and establishes a valuation allowance to reduce the deferred tax assets if it is determined more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company considers all available positive and negative evidence, including recent financial performance, actual earnings (losses), future reversals of existing temporary differences, projected future taxable income, and tax planning strategies.

Millrose intends to elect to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), when the Company files a REIT tax election with its federal income tax return for the taxable year ended December 31, 2025. As Millrose qualifies as a REIT, it generally will not be subject to U.S. federal income tax on its net income that it distributes to its stockholders. To maintain its qualification as a REIT, Millrose will be required under the Code to distribute at least 90% of its REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to its stockholders and meet certain other requirements. If the Company fails to maintain its qualification as a REIT in any taxable year, it will then be subject to federal income taxes on its taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants Millrose relief under certain statutory provisions. Such an event could have a material adverse effect on its net income and net cash available for distribution to its members.

Millrose intends to elect for its wholly owned subsidiaries MPH Parent and Millrose Holdings as well as its indirectly wholly owned subsidiary RCH Holdings, Inc. to be taxable as TRSs and may form or acquire other direct or indirect wholly owned subsidiaries that will also elect to be taxed as TRSs in the future. TRSs are subject to taxation at regular corporate income tax rates.

See Note 10. Income Taxes for additional information.

Other Income (Expense)

The Company records revenue and expenses that are not directly related to the core operations of the Company as other income (expense). Other income (expense) for the three months ended June 30, 2026 and 2025 was $39.3 million expense and $9.3 million expense, respectively. Other income (expense) for the three months ended June 30, 2026 consisted of $40.0 million of interest expense on the Company’s debt obligations and $0.4 million of other expenses, partially offset by $1.1 million of interest income related to cash balances. Other income (expense) for the three months ended June 30, 2025 consisted of interest expense of $10.3 million for the Revolving Credit Facility and DDTL Credit Agreement and, other expenses of $0.8 million, partially offset by interest income of $1.8 million related to cash balances.

Other income (expense) for the six months ended June 30, 2026 and 2025 was $77.5 million expense and $10.7 million expense, respectively. Other income (expense) for the six months ended June 30, 2026 consisted of $79.2 million of interest expense on the Company’s debt obligations and $0.5 million of other expenses, partially offset by $2.2 million of interest income related to cash balances. Other income (expense) for the six months ended June 30, 2025 consisted of interest expense of $12.8 million for the Company’s debt obligations, and other expenses of $0.8 million, partially offset by interest income of $2.9 million related to cash balances.

Fair Value Measurements

Certain assets and liabilities are required to be reported at fair value under GAAP. The framework for determining fair value provided by GAAP prioritizes the inputs used in measuring fair value as follows:

•

Level 1: Fair value determined based on quoted prices in active markets for identical assets or liabilities.

•

Level 2: Fair value determined using significant other observable inputs.

•

Level 3: Fair value using significant other unobservable inputs.

As of June 30, 2026, the Company did not measure any assets or liabilities at fair value on a recurring or nonrecurring basis.

Other liabilities approximate their fair value due to their short-term nature. Debt obligations, net approximate their fair value. The Company’s Revolving Credit Facility and DDTL Credit Facility bear interest at variable rates that reset periodically; and therefore, approximates fair value. The Company’s Senior Notes were issued at market terms during 2025 and approximate fair value as of the reporting date.

Recent Accounting Standards

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”), which requires disclosure of disaggregated information about certain income statement expense line items in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company has elected not to early adopt and is currently evaluating the potential impact of ASU 2024-03 on its financial statements and disclosures.

In November 2025, the FASB issued ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans (“ASU 2025‑08”), which amends accounting for certain acquired loans. ASU 2025‑08 expands the “gross‑up” method under ASC 326, previously limited to purchased credit-deteriorated (“PCD”) assets, to include certain purchased seasoned loans, eliminating Day 1 credit loss expense and aligning the treatment with that of PCD assets. The update is effective for interim and annual reporting periods beginning after December 15, 2026, with prospective application; early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2025‑08 on its financial statements and disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). The amendments clarify scope and presentation guidance in Topic 270, consolidate interim disclosures, and introduce a requirement to disclose events since the end of the most recent annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company does not expect adoption to have a material impact on its financial statements and disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025‑12”), which provides technical corrections, clarifications, and minor improvements to the FASB Accounting Standards Codification without introducing major changes to accounting practice. Among other items, ASU 2025-12 clarifies that lease receivables from sales-type leases are excluded from the enhanced disclosures required by ASU 2022-02-Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company does not expect adoption to have a material impact on its financial statements and disclosures.