Millrose Properties, Inc. Class A

Hello, everyone. Thank you for joining us and welcome to the Milrose Properties second quarter 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 will now hand the conference over to Jesse Ross, Milrose's head of financial planning and analysis. Jesse, please go ahead.

Good morning, and thank you for joining us to discuss Milrose Properties' second quarter 2026 results. Joining me on the call today are Darren Richman, our Chief Executive Officer and President, Robert Nitkin, our Chief Operating Officer, Garett 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. Millrose delivered another strong quarter. We grew invested capital, boosted recurring AFFO, deepened builder relationships, and expanded the range of solutions our permanent capital platform provides. Demand for what we do has never been higher, even as builders continue to navigate a fourth consecutive year of mortgage rates above 6%, elevated incentives, and a full year 2026 delivery guidance moving lower across the largest public builders. In this environment, as we said before, builders are balancing four competing objectives simultaneously. Maintaining sales pace through pricing and incentive strategies. Protecting profitability in a more competitive selling environment, preserving and growing their future community count, and limiting capital tied up in long-duration land ownership. Those priorities have made capital efficiency a necessity, and our permanent capital platform was created to respond to that very need. Homeholders cannot simply stop their production activity because near-term demand moderates. The communities that they expect to deliver in 2028 and 2029 require land acquisition and development decisions today. The Millrose platform allows builders to continue investing for long-term growth while preserving balance sheet flexibility and improving capital efficiency. We believe this is more than a cyclical response to today's market. It reflects a structural evolution in how builders think about capital allocation. That evolution is playing out visibly across the sector, with public builders' owned and controlled lot positions trending low for four consecutive quarters. Builders are not chasing land at any cost. They are right-sizing land inventory to match demand and are now more regularly outsourcing ownership to third-party capital providers like ourselves. Turning to our second quarter results, our invested capital reached approximately $8.8 billion at quarter end. Importantly, we recycled approximately $1 billion during the quarter, capital returned from builder takedowns and development loan repayments, and redeployed it into approximately $1.1 billion of new opportunities at underwriting standards that have not moved. That velocity of deployment held to a consistent underwriting bar is what a mature permanent capital platform is designed to produce. There were no option terminations across the platform this quarter, and in fact, zero option terminations since the inception of Milrow's platform. Every counterparty has honored every option contract as scheduled. Against a backdrop where several public builders have continued to record walk-away charges on parcels they chose to abandon, the durability of our portfolio reflects both the quality of our underwriting and the strength of our builder relationships. We now serve 18 third-party counterparties, including several of the nation's largest homebuilders, with approximately 32% of invested capital deployed outside of our founding Lennar Master Program Agreement. We added two new counterparty relationships this quarter. Among them is a new land banking relationship with JPI, a wholly-owned subsidiary of Sumitomo Forestry, which represents our first expansion into multifamily assets. This is a meaningful new use case for the platform and it opens additional runway across the residential housing ecosystem. Beyond expanding our counterparty set, we are also finding new ways to deploy capital across the platform. In May, we announced our intent to provide land banking capital in support of DreamFinders Homes, proposed acquisition of Beezer Homes. While there is currently no agreement in place between those two parties, we believe the announcement illustrates a broader strategic role Milrose is beginning to play, not just supporting organic growth at our counterparties, but facilitating capital efficient consolidation across the industry. With M&A activity accelerating across the home building sector, we expect further opportunities to demonstrate that capability. AFFO for the quarter was $127.6 million or $0.77 per diluted share, driven by higher recurring option fee income on growing invested capital base. That figure absorbed a first day of quarter early repayment of approximately $284 million of development loans, which Garett will unpack in more detail. Our run rate AFFO exiting the quarter was approximately $0.80 per share at the high end of our previously provided exit run rate guidance. At the same time, we continue looking for opportunities to improve our business internally. Our technology platform and operating infrastructure have matured, and we have turned increasing attention to how our business operates at every level. We are focused on making sure every dollar of capital is working as hard as possible, and we expect that focus to show up in our results over time. We maintain a strong capital foundation with approximately $1.4 billion of available liquidity and a conservative balance sheet. Finally, we declared our sixth consecutive quarterly dividend increase, raising the dividend to 77 cents per share. The dividend is fully supported by recurring AFFO and represents an annualized yield of approximately 8.8% on book equity. We believe the consistency of our dividend growth reflects the durability of our earnings model and our confidence in the platform's long term trajectory. With that, I'll turn the call over to Rob for an operational update.