Millrose Properties, Inc. Class A

gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Millrose Properties first quarter 2025 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. We kindly ask that you please limit your questions to one and one follow-up. If you have additional questions, please return to the queue. I will now turn the call over to Jesse Ross, Milrose Head of Financial Planning and Analysis. Jesse, you may begin the conference.

Good morning, everyone, and thank you for joining us for Milrose Properties' first earnings call as a publicly traded company, following our spinoff from Lenard Corporation on February 7th. With us today to discuss our first quarter 2025 results are Darren Richmond, our Chief Executive Officer and President, Robert Nitkin, our Chief Operating Officer, and Garrett Rosenblum, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may include forward-looking statements and discuss non-GAAP financial measures. It should be noted that a variety of factors could cause actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Please refer to the first quarter 2025 financial and operational results announced as well as the first quarter investor presentation we released and posted on our website under the investor relations heading for a discussion of forward-looking statements and reconciliations of non-GAAP financial measures. With that, I'll turn the call over to Darren.

Thank you, Jesse, and good morning, everyone. It is my pleasure to welcome you to our first earnings call as a standalone company. This is an exciting milestone for us, and we're eager to share the progress we've made in our first quarter as a public company. Millroads is the first publicly traded land banking REIT that provides home builders with a reliable, efficient source of capital for land acquisition and development. Our innovative home option purchase platform allows us to deliver home sites to builders on a just-in-time basis, while generating recurring predictable cash flows for our shareholders. We maintain a close, mutually beneficial relationship with Lennar Corporation, one of the nation's leading home builders. Lennar serves as our anchor tenant with a portfolio of approximately 6.6 billion in assets under purchase option agreements with a weighted average yield of 8.5% as of March 31st, 2025. This relationship provides Milrose with a stable foundation as we grow and diversify our platform to serve other home builders. The value we bring to the market is clear. Home builders today face increasing challenges in managing their balance sheets while maintaining the flexibility to respond to market opportunities. Milrose is uniquely positioned to be their trusted partner, offering perpetual capital solution that alleviates balance sheet demands and unlocked enterprise value. For investors, Millrose represents a stable, tax-efficient, income-generating investment vehicle. Our business model is simple yet powerful. We generate consistent income from monthly option fee payments on capital deployed. Importantly, our revenue model is not tied to land value speculation or the execution of land development. which helps us to deliver highly predictable revenues, earnings, and dividends. Our strategy is built with a long-term success. While broader demand for homes has remained strong, the housing market continues to face pressures of high interest rates and other market uncertainties. Despite this economic backdrop, home builders are continuing to invest in land and land development. Looking at the longer term, strong structural tailwinds persist. We believe that there continues to be a significant shortfall in housing supply, and while estimates vary the actual deficit, most estimates peg the gap in the range of 3 to 5 million units. Additionally, many of our builder clients are operating with historically high margins and strong balance sheets, highlighted by low leverage levels, positioning them and the industry for resilience and future growth. We believe Millrose is well positioned to capitalize on these trends. Our unique operating model allows us to scale efficiently while maintaining a conservative risk profile. We're excited about the opportunities ahead and we're committed to delivering value for our shareholders, home builder partners, and the communities we serve. We are already proving out our investment thesis. Our first quarter of operations was highlighted by robust demand for our capital demonstrating the power of the Millrose platform. Looking first at our Lennar portfolio, we are seeing our capital recycling model at work with receipts of $645 million in cash proceeds from home site sales to Lennar and $635 million redeployed into land acquisition and development funding in the quarter. We have also made progress in growing our partnerships with other home builders. While we don't disclose the names of our specific customers to protect the confidentiality of those counterparties, we can say that the engagement across the industry has been overwhelmingly positive. We have executed five separate programmatic partnership commitments with homebuilder counterparties, which provide the builder with defined capital availability from Millrose under pre-negotiated terms. We believe this approach gives our counterparties important visibility in their land planning. During the quarter, we announced 351 million of transactions outside the Lennar relationship, with average yields of 11.7%. We're pleased to report that this progress has continued after the quarter end, with approximately 130 million of additional non-Lennar transactions between the March 31st quarter end and today, resulting in approximately 480 million of total cumulative transactions funding since the spinoff. We are also excited to announce a significant new transaction. Millrose has entered into a commitment to fund approximately $700 million in a traditional land banking transaction structure in partnership with the New Home Company to support their acquisition of land C homes. This transaction, like our previously announced Roush-Cullman transaction, exemplifies Millrose's differentiated ability to facilitate large-scale capital efficient M&A in the homebuilding sector. Given this exciting increase in demand, we are increasing our full year 2025 guidance in transaction funding outside of the Lennar Master Plan agreement to $1.5 billion from the previously announced $1 billion. I will share, however, that I've set for our team an internal stretch target of $2 billion, which I do believe is achievable given the market reception we've observed thus far. Accordingly, we are also increasing our year-end quarterly earnings per share run rate guidance to a range of 69 to 71 cents per share. To support this investment pace, we are also pleased to announce a new signed $1 billion delayed draw term loan commitment from Goldman Sachs and JPMorgan. This new capital commitment, in addition to our $1.3 billion revolving credit facility, provides us with ample capital capacity to execute on our growing opportunity set. Our performance demonstrates the power of our business model, and we are excited about the future prospects as we continue to leverage the Lennar agreement while also diversifying our business and capitalizing on growing demand across the industry. Overall, we see a number of very durable sector tailwinds that should continue to advantage Melrose. They are, one, the as mentioned structural shortage of housing, mainly the result of challenges to get land permitted and entitled. Two, the new home market continues to pick up market share from the existing home market given the structural move in interest rates. Three, the big builders continue to get bigger owing to their scale advantages. And four, more builders are shifting to just-in-time delivery of land and are embracing land-light strategies. With that, I will now turn the call over to Rob for an operational update.