Millrose Properties, Inc. Class A

Hello, everyone. Thank you for joining us and welcome to Milrose Properties' first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I would now like to hand the conference over to Jesse Ross, Milrose Head of Financial Planning and Analysis. Jesse, please go ahead.

Good morning, and thank you for joining us to discuss Milrose Properties' first quarter 2026 results. Joining me on the call today are Darren Richmond, our Chief Executive Officer and President, Robert Nicken, our Chief Operating Officer, Garrett Rosenblum, our Chief Financial Officer, and Stephen Hensley, our Senior Market Risk Analyst. Before we begin, I'd like to remind everyone that today's discussion may include forward-looking statements and references to non-GAAP financial measures. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a more complete discussion of these factors, as well as reconciliations of non-GAAP measures, please refer to our earnings release and investor presentation, both of which are available on our investor relations website. With that, I'll turn the call over to Darren.

Thank you, Jesse, and good morning, everyone. Melrose delivered solid results in the first quarter of 2026, performing in line with our expectations and continuing to demonstrate the strength and durability of our platform. We deployed capital in a disciplined manner, expanded our relationships across the homebuilding ecosystem, and generated predictable recurring earnings consistent with the design of our model. Before I walk through the quarter, I want to share a broader observation. Over the past several weeks, we have had the benefit of listening to virtually every major public home builder report. The message was remarkably consistent, and it was also very relevant to what Milrose does. Builders today are navigating four competing priorities simultaneously. Maintaining sales pace through incentives and inventory management, protecting balance sheets amid meaningful margin compression, preserving and in many cases growing their land pipeline and community count, and restricting direct land ownership when visibility is limited. Those four objectives are fundamentally in tension with one another. You cannot grow community count while also shrinking your balance sheet unless you have a partner like Milrose. It is important to understand the time horizons embedded in these decisions. The home site builders are taking down today may support closings this quarter or next, but the land acquisition and development commitments they are making right now are three to five-year decisions about where they want communities producing in 2028 and 2029. Builders told the market very clearly this quarter that they will not sacrifice future community count, even in an uncertain near-term environment. That long-duration commitment is exactly the duration of a Milrose option agreement, and it is why near-term demand variability does not translate into a pause in land investment activity. That tension is not a cyclical phenomenon. It reflects a permanent evolution in how this industry thinks about capital. Gross margins across the public builders have compressed 200 to 500 basis points year on year. When that happens, every point of return on equity matters more, and owning land becomes more expensive in opportunity cost terms. Put simply, when builders are earning less on every home, the last thing they want is more capital tied up in the land that won't produce a closing for years. But they can't afford to lose those future communities either. That is the exact problem Milros solves. Capital efficiency is no longer just a balance sheet preference, it is a profit center. That framing is important because it distinguishes what Milros offers from simply providing financing. Demand from the home builders for land acquisition and development funding remains steady. Our platform continues to expand and our model is working exactly as intended. Our model continues to generate predictable recurring cash flows supported by strong capital recycling dynamics and a stable earnings profile that is independent of land price appreciation or market timing. During the quarter, invested capital increased to approximately $8.7 billion, up from $8.5 billion at year end, of which 95% is pulled, reflecting continued discipline in deployments. That growth is reflected in our expanding relationships across the home building ecosystem. We ended the quarter with 17 counterparties, up from 15 at year end, with approximately 31% of our portfolio deployed outside of the Lennar Master Program Agreement. This continued diversification is a key indicator of both demand for our platform and our ability to scale beyond our foundational anchor relationships. AFFO for the quarter was $125.9 million, an increase from last quarter despite the first quarter two fewer calendar days, 90 days versus 92 days in the fourth quarter. On a per-day basis, AFFO was 2.5% higher versus last quarter. Our income is contractual, recurring, and not dependent on land price appreciation, home prices, or the pace of home sales. Despite a dynamic macro environment, we have seen no changes in our counterparty behavior, no terminations and continued engagement from builders seeking to optimize their balance sheets through our platform. As we move through the spring selling season, early indicators remain constructive. Builders have described as choppy through the first quarter, generally solid in January and February, but some moderation in March, tied to rate volatility and geopolitical uncertainty. What we are seeing from our counterparties is the continued discipline, pulling back on starts where appropriate, prioritizing returns, and leaning into partners like Melrose to maintain community growth without adding balance sheet risk. That is exactly the behavior our model is designed to support. Stephen will provide more detail on what we are seeing across markets momentarily. During the quarter, we further strengthened our capital base. We amended and restated our credit agreement, converting it from a secured structure to an unsecured facility and adding a new 500 million delayed draw term loan commitment, bringing our total unsecured capacity to approximately 1.8 billion. This reflects the confidence our partners have in the durability of our platform and positions us to deploy capital with greater speed and flexibility as our pipeline continues to build. As a publicly traded company with 1.5 billion of quarter end liquidity and a fully unsecured investment grade caliber capital structure, Milrus offers counterparties a degree of capital certainty and transparency that private land banking alternatives are structurally unable to replicate. Operationally, we continue to execute at a high level. Our technology and operating infrastructure enable efficient capital deployment and portfolio management while ongoing capital recycling supports reinvestment across a growing opportunity set. We are continuing to deepen our reputation as the most operationally mature and efficient strategic capital partner to homebuilders, enabling their growth with confidence while improving their capital efficiency. Finally, we remain committed to delivering consistent and durable returns to our shareholders. We declared a quarterly dividend of 76 cents per share, fully covered by FFO of 76% per share, representing an annualized dividend yield of 8.7% on book equity, up approximately 30 basis points from the prior quarter. The full coverage of our dividend by AFFO reflects the predictable recurring cash flow characteristics of our platform and our confidence in the sustainability of these returns. With that, I'll turn the call over to Rob for an operational update. Thank you, Darren.