Millrose Properties, Inc.

Previous wording

Millrose is a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose became an independent, publicly traded company on February 7, 2025 following the Spin-Off from Lennar and its Class A common stock is listed on the NYSE under the symbol “MRP”. We purchase and develop residential land and sell finished homesites to homebuilders by way of option contracts with predetermined costs and takedown schedules. We serve as a solution for homebuilders seeking to expand access to finished homesites while implementing an asset-light strategy. As fully developed homesites are sold by Millrose, capital is recycled into future land acquisitions for homebuilders, providing counterparties with durable access to community growth. Our option contracts provide for the payment of recurring option fees paid by our counterparties through the term of the applicable contract. To a lesser extent, we also provide development loans secured by property intended for single-family use to certain third-party counterparties. We are externally managed and advised by KL pursuant to the management agreement entered into on February 7, 2025 between Millrose and KL (the “Management Agreement”).

Current wording

Millrose is a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose became an independent, publicly traded company on February 7, 2025 following the Spin-Off from Lennar and its Class A common stock is listed on the NYSE under the symbol “MRP”. We purchase and develop residential land and sell finished homesites to homebuilders by way of option contracts with predetermined costs and takedown schedules. We serve as a solution for homebuilders seeking to expand access to finished homesites while implementing an asset-light strategy. As fully developed homesites are sold by Millrose, capital is recycled into future land acquisitions for homebuilders, providing counterparties with durable access to community growth. Our option contracts provide for the payment of recurring option fees paid by our counterparties through the term of the applicable contract. To a lesser extent, we also provide development loans secured by property intended for single-family use to certain third-party counterparties and own a portfolio of single-family residential rental properties.

Previous wording

Invested Capital is a non-GAAP financial measure that represents the balance on which monthly cash option fees are paid by counterparties. Invested Capital includes certain components of our condensed consolidated financial statements related to (i) homesites under option contracts, (ii) development loans receivable, and (iii) liabilities. The most directly comparable GAAP financial measure is homesites under option contracts as presented in the Company’s condensed consolidated balance sheets. Management uses Invested Capital as a measure of the capital deployed and believes that the figure is useful to investors because it serves as the basis for generating option fees and other related income. This non-GAAP measure is presented solely to permit investors to understand how our management assesses underlying performance and is not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

Current wording

Invested Capital is a non-GAAP financial measure that represents the balance on which monthly cash option fees are paid by counterparties. Invested Capital includes certain components of our condensed consolidated financial statements related to (i) homesites under option contracts, (ii) development loans receivable, (iii) preferred instruments, and (iv) liabilities. The most directly comparable GAAP financial measure is homesites under option contracts as presented in the Company’s condensed consolidated balance sheets. Management uses Invested Capital as a measure of the capital deployed and believes that the figure is useful to investors because it serves as the basis for generating option fees and other related income. This non-GAAP measure is presented solely to permit investors to understand how our management assesses underlying performance and is not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

Previous wording

Includes acquisitions of homesites under option contracts, net of option earnings deposits, and development loan funding for the three months ended June 30, 2026.

Current wording

Includes acquisitions of homesites under option contracts, net of option earnings deposits, preferred instruments and development loan funding for the three months ended September 30, 2026.

Previous wording

Calculated by multiplying Invested Capital balance at end of period by weighted average yield as of June 30, 2026, adjusted for the number of days in the second quarter 2026.

Current wording

Calculated by multiplying Invested Capital balance at end of period by weighted average yield as of September 30, 2026, adjusted for the number of days in the third quarter 2026.

Previous wording

During the three months ended June 30, 2026, we funded $566 million for land acquisition and development and received $590 million in net takedown proceeds under the Master Program Agreement at a weighted average yield of 8.5%. We funded $555 million for land acquisition and development and received $438 million in net takedown proceeds for Other Agreements during this period at a weighted average yield of 10.6%. On a total portfolio basis, the weighted average yield was 9.2% as of June 30, 2026.

Current wording

During the three months ended September 30, 2026, we funded $545.7 million for land acquisition and development and received $620.9 million in net takedown proceeds under the Master Program Agreement at a weighted average yield of 8.5%. We funded $714.4 million for land acquisition and development and received $192.8 million in net takedown proceeds for Other Agreements during this period at a weighted average yield of 10.8%. On a total portfolio basis, the weighted average yield was 9.3% as of September 30, 2026.

Previous wording

As of June 30, 2026, our homesite assets consisted of 877 properties (also known as communities) in 30 states across the United States, totaling approximately 143,771 homesites, with an approximate aggregate value of $9.6 billion of homesites under option contracts. Of the homesites owned as of June 30, 2026, we expect the total takedown prices of all homesites to be approximately $16.3 billion, and the total estimated development costs of homesites to be approximately $6.9 billion.

Current wording

As of September 30, 2026, homesite assets consisted of 834 properties (also known as communities) in 30 states across the United States, totaling approximately 156,729 homesites, with an approximate aggregate value of $9.9 billion of homesites under option contracts. Of the homesites owned as of September 30, 2026, we expect the total takedown prices of all homesites to be approximately $16.5 billion, and the total estimated development costs of homesites to be approximately $6.7 billion.

Previous wording

As of June 30, 2026, our property assets are collectively located across 30 U.S. states. Approximately 51% of the property assets are concentrated in three states (California, Florida, Texas) and approximately 42% are located in two strong housing market states: Florida and Texas (where we believe the market has healthy underlying demographic and/or economic trends primarily driven by generally steadily growing population).

Current wording

Approximately 53% of the property assets are concentrated in three states (California, Florida, Texas) and approximately 44% are located in two strong housing market states: Florida and Texas (where we believe the market has healthy underlying demographic and/or economic trends primarily driven by generally steadily growing population).

Previous wording

As of June 30, 2026, we had 143,771 homesites with 19 counterparties, which were included in 73 separate pools, in accordance with the applicable Multiparty Cross Agreements. As of June 30, 2026, 95% of our invested capital balance was pooled under pooling arrangements, of which 100% was pooled under the Master Program Agreement.

Current wording

As of September 30, 2026, we had 156,729 homesites with 22 counterparties, which were included in 76 separate pools, in accordance with the applicable Multiparty Cross Agreements. As of September 30, 2026, 93% of our invested capital balance was pooled under pooling arrangements, of which 100% was pooled under the Master Program Agreement.

Previous wording

The following is a summary of the key components of our operations for the three and six months ended June 30, 2026:

Current wording

The following is a summary of the key components of our operations for the three and nine months ended September 30, 2026:

Previous wording

Our primary source of revenue is income generated from holding land under option contracts. The Company accounts for these contracts under ASC 842 Leases because the Company transfers elements of control of the homesites to the counterparties during the option contract period. The Company owns title to and holds land during the development period and grants our counterparties under these contracts exclusive options to purchase land at predetermined prices and takedown schedules. In return the Company earns income on our homesites under option contracts through recurring option fees paid by our counterparties through the term of the applicable option contract. We also derive development loan income from interest earned on the outstanding loan balance of development loans secured by residential property.

Current wording

Our primary source of revenue is income generated from holding land under option contracts. The Company accounts for these contracts under ASC 842 Leases because the Company transfers elements of control of the homesites to the counterparties during the option contract period. The Company owns title to and holds land during the development period and grants our counterparties under these contracts exclusive options to purchase land at predetermined prices and takedown schedules. In return the Company earns income on our homesites under option contracts through recurring option fees paid by our counterparties through the term of the applicable option contract. We also derive development loan income from interest earned on the outstanding loan balance of development loans secured by residential property. We expect to generate rental revenue from residential lease agreements associated with single-family residential properties.

Previous wording

Operating Expenses: Our operating expenses after the Spin-Off include Management Fees (as defined below) paid to KL for management and advisory services. The management fee is calculated as 1.25% of Tangible Assets (as defined in the Management Agreement) (the “Management Fee”). All personnel are employed by the Manager or an affiliate of the Manager, and their salaries are paid by the Manager or its affiliate, as applicable; therefore, we do not record personnel-related expenses, including salaries, benefits, and share-based compensation for any employees. All cash compensation paid to our Board of Directors (the “Board”) and certain general and administrative expenses are covered by the Management Fee. The Management Fee does not cover offering expenses, costs incurred for services in connection with extraordinary litigation and mergers and acquisitions and other events outside of Millrose’s ordinary course of business, and, in some circumstances, costs associated with the ownership and maintenance of land. Any such expenses that are not covered by the Management Fee are paid for by Millrose and are recorded as general and administrative expenses or other expenses, as appropriate under GAAP. Certain of our option agreements provide (and new option agreements in the future may provide) for reimbursement by the counterparties of our transaction and/or asset management expenses, including third-party legal, diligence and servicing costs, and may include certain amounts paid by such counterparties directly to affiliates of the Manager in connection with related services provided to by such affiliates to the applicable counterparties. Our operating expenses include stock-based compensation for restricted stock units (“RSUs”) granted to each member of the Board through the quarter ended June 30, 2026. The Company records the RSU award costs on a straight-line basis over the RSU vesting period as stock-based compensation in operating expenses. The Company also records a provision for (benefit from) credit losses in accordance with ASC 326 Financial Instruments – Credit Losses.

Current wording

Operating Expenses: Our operating expenses after the Spin-Off include Management Fees (as defined below) paid to KL for management and advisory services. The management fee is calculated as 1.25% of Tangible Assets (as defined in the Management Agreement) per annum (the “Management Fee”). All personnel are employed by the Manager or an affiliate of the Manager, and their salaries are paid by the Manager or its affiliate, as applicable; therefore, we do not record personnel-related expenses, including salaries, benefits, and share-based compensation for any employees. All cash compensation paid to our Board of Directors (the “Board”) and certain general and administrative expenses are 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, certain property-level operating expenses for single-family residential properties, and, in certain circumstances, costs associated with the ownership and maintenance of land. Any such expenses that are not covered by the Management Fee are paid for by Millrose and are recorded as general and administrative expenses or other expenses, as appropriate under GAAP. Certain of our option agreements provide (and new option agreements in the future may provide) for reimbursement by the counterparties of our transaction and/or asset management expenses, including third-party legal, diligence and servicing costs, and may include certain amounts paid by such counterparties directly to affiliates of the Manager in connection with related services provided to by such affiliates to the applicable counterparties.

Previous wording

For the three and six months ended June 30, 2025, our operating expenses included an allocation of salaries, general, and administrative expenses for the Predecessor Millrose Business prior to the Spin-Off for the period of January 1, 2025 through February 7, 2025. These expenses have been allocated from Lennar based on a reasonable proportional cost allocation method primarily based directly on headcount, usage, or other allocation methods depending on the nature of the services. The allocation was 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.

Current wording

For the three and nine months ended September 30, 2025, our operating expenses included an allocation of salaries, general, and administrative expenses for the Predecessor Millrose Business prior to the Spin-Off for the period of January 1, 2025 through February 7, 2025. These expenses have been allocated from Lennar based on a reasonable proportional cost allocation method primarily based directly on headcount, usage, or other allocation methods depending on the nature of the services. The allocation was 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.

Previous wording

Other Income (Expense): We record interest income earned on our cash balances held with financial institutions as other income as it is not part of the primary activities of the business. Other expenses also include (i) interest expense related to our debt obligations, and (ii) other expenses which may include rating agency fees, legal fees, audit fees, and bank fees.

Current wording

We record interest income earned on our cash balances held with financial institutions as other income as it is not part of the primary activities of the business. Other expenses also include (i) interest expense related to our debt obligations, and (ii) other expenses which may include rating agency fees, legal fees, audit fees, and bank fees. We also derive income from the preferred instrument purchased from Dream Finders. Income from preferred instruments consists of dividend income, original issue discount accretion and amortized commitment fee income related to the preferred instrument.

Previous wording

The following discussion describes the results of operations for the three and six months ended June 30, 2026 versus the three and six months ended June 30, 2025. The financial data for the six months ended June 30, 2025 includes the combined results of operations for the Predecessor Millrose Business prior to the Spin-Off. We have a single operating and reportable segment in accordance with GAAP and our operations are conducted in the United States.

Current wording

The following discussion describes the results of operations for the three and nine months ended September 30, 2026 versus the three and nine months ended September 30, 2025. The financial data for the nine months ended September 30, 2025 includes the combined results of operations for the Predecessor Millrose Business prior to the Spin-Off. We have a single operating and reportable segment in accordance with GAAP and our operations are conducted in the United States.

Previous wording

Our net income was $125.9 million for the three months ended June 30, 2026, compared to $112.8 million for the three months ended June 30, 2025. The increase in net income was primarily driven by (i) higher option fee revenues in the current-year period, (ii) a reduction to the allowance for credit losses related to the payoff of a development loan with an unaffiliated third party, and (iii) lower income tax expense. These increases were partially offset by (i) lower development income related to the payoff of the development loan, (ii) higher Management Fee expense, and (iii) higher interest expenses related to the Company’s debt obligations.

Current wording

Net income was $130.0 million for the three months ended September 30, 2026, compared to $105.1 million for the three months ended September 30, 2025. The increase in net income was primarily driven by (i) higher option fee revenues, (ii) a lower provision for credit losses, (iii) lower income tax expense, and (iv) income from preferred instruments. These increases were partially offset by (i) lower development loan income resulting from the payoff of the development loan with an unaffiliated party during the second quarter of 2026, (ii) lower interest income, (iii) higher management fee expense, and (iv) higher interest expense related to the Company's debt obligations.

Previous wording

Option fees revenues were $195.4 million for three months ended June 30, 2026, compared to $141.1 million for the three months ended June 30, 2025, reflecting continued growth in our business as a result of geographic expansion and counterparty diversification.

Current wording

Option fee revenues were $209.5 million for the three months ended September 30, 2026, compared to $170.3 million for the three months ended September 30, 2025, reflecting continued growth in our business as a result of geographic expansion and counterparty diversification.

Previous wording

Stock-based compensation expense related to RSUs granted to the Board members was $0.9 million for the six months ended June 30, 2026, compared to $0.2 million for the six months ended June 30, 2025. The increase was primarily attributable to stock-based compensation recognized in connection with additional RSUs granted on December 10, 2025 and May 13, 2026, compared to the prior-year period, which included RSUs granted on April 3, 2025.

Current wording

Stock-based compensation expense related to RSUs granted to the Board was $0.3 million for the three months ended September 30, 2026, compared to $0.2 million for the three months ended September 30, 2025. The increase was primarily attributable to compensation expense recognized on RSUs granted on December 10, 2025 and May 13, 2026, compared to the prior-year period, which reflected compensation expense related to RSUs granted on April 3, 2025.

Previous wording

Other income (expense) was a net expense of $77.5 million for the six months ended June 30, 2026, compared to a net expense of $10.7 million for the six months ended June 30, 2025. Other income (expense) for the six months ended June 30, 2026 includes (i) interest expense for the Credit Agreement (including interest incurred under the Company’s prior revolving credit facility before March 25, 2026) and Senior Notes of $79.2 million, and (ii) other expenses of $0.5 million, which was partially offset by interest income of $2.2 million earned on cash balances held in the Company’s operating bank accounts. 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.

Current wording

Other income (expense) for the three months ended September 30, 2026 and 2025 was $45.6 million net expense and $41.9 million net expense, respectively. Other income (expense) for the three months ended September 30, 2026 consisted of interest expense of $47.1 million related to the Company’s debt obligations and other expenses of $0.5 million, partially offset by income from preferred instruments of $1.0 million and interest income of $1.0 million related to cash balances. Income from preferred instruments consisted of dividend income of $0.9 million, original issue discount accretion of $0.04 million and commitment fee amortization of $0.02 million. Other income (expense) for the three months ended September 30, 2025 consisted of interest expense of $43.7 million for the Company’s debt obligations and, other expenses of $0.6 million, partially offset by interest income of $2.4 million related to cash balances. No income from preferred instruments was recognized during the three months ended September 30, 2025.

Previous wording

The provision for income taxes for the three months ended June 30, 2026 was $2.5 million, compared to $4.8 million for the three months ended June 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the three months ended June 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9%, compared to 24.8% for the three months ended June 30, 2025. See Note 10. Income Taxes in the condensed consolidated financial statements for more information.

Current wording

The provision for income taxes for the three months ended September 30, 2026 was $4.9 million, compared to $5.9 million for the three months ended September 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the three months ended September 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9 %, compared to 24.8% for the three months ended September 30, 2025. See Note 13. Income Taxes in the condensed consolidated financial statements for more information.

Previous wording

Our net income was $248.8 million for the six months ended June 30, 2026, compared to $152.5 million for the six months ended June 30, 2025. Net income for the six months ended June 30, 2025 included post Spin-Off income of $177.5 million, partially offset by pre-spin net loss of $25.0 million related to sales, general, and administrative expenses attributable to the Predecessor Millrose Business.

Current wording

Our net income was $378.8 million for the nine months ended September 30, 2026, compared to $257.6 million for the nine months ended September 30, 2025. Net income for the nine months ended September 30, 2025 included post Spin-Off income of $282.6 million, partially offset by pre-spin net loss of $25.0 million related to sales, general, and administrative expenses attributable to the Predecessor Millrose Business.

Previous wording

The increase in net income was primarily driven by (i) higher revenues in the current-year period, (ii) a reduction in the allowance for credit losses related to the payoff of a development loan with an unaffiliated third party, and (iii) lower income tax expense. These increases in net income were partially offset by (i) higher interest expense related to the Company’s debt obligations, and (ii) higher stock-based compensation expense for RSUs granted to the Board members.

Current wording

The increase in net income was primarily driven by (i) higher option fee revenues, (ii) a reduction in the allowance for credit losses related to the payoff of a development loan with an unaffiliated third party, (iii) lower income tax expense, and (iv) the absence of pre-Spin-Off sales, general and administrative expenses recognized during the prior-year period. These increases were partially offset by (i) lower development loan income resulting from the payoff of a development loan with an unaffiliated third party, (ii) higher management fee expense, and (iii) higher interest expense related to the Company's debt obligations.

Previous wording

Option fees revenues were $380.7 million for six months ended June 30, 2026, compared to $221.2 million for the six months ended June 30, 2025, reflecting (i) a full two quarters of post Spin-Off operations compared to a partial post Spin-Off period in the prior-year period, and (ii) continued growth in our business as a result of geographic expansion and counterparty diversification. In the prior-year period prior to the Spin-Off, the Predecessor Millrose Business did not generate option fee revenues because its inventories were not subject to purchase option contracts with homebuilders. The principal operating activities related to finished homesites were conducted by the Predecessor Millrose Business’s parent company, who sold those homesites to Lennar counterparties.

Current wording

Option fee revenues were $590.2 million for the nine months ended September 30, 2026, compared to $391.5 million for the nine months ended September 30, 2025. The increase was primarily attributable to (i) a full nine months of post-Spin-Off operations in the current-year period compared to a partial post-Spin-Off period in the prior-year period and (ii) continued growth in the Company's business through geographic expansion and counterparty diversification. Prior to the Spin-Off, the Predecessor Millrose Business did not generate option fee revenues because its homesite inventory was not subject to purchase option contracts with homebuilders. The principal operating activities related to finished homesites were conducted by the Predecessor Millrose Business's parent company, which sold such homesites to Lennar counterparties.

Previous wording

Development loan income for the three months ended June 30, 2026 was $1.5 million, compared to $7.9 million for the three months ended June 30, 2025. The decrease in development loan income is due to the $284 million payoff of a development loan with an unaffiliated party on April 1, 2026, which resulted in lower interest income earned under the development loan agreement during the current-year period.

Current wording

Development loan income was $12.6 million for the nine months ended September 30, 2026, compared to $19.5 million for the nine months ended September 30, 2025. The decrease was primarily due to the payoff of a $284 million development loan with an unaffiliated party on April 1, 2026, which resulted in lower interest income earned under the development loan agreement during the current-year period.

Previous wording

Management Fee expense for the six months ended June 30, 2026 was $58.1 million, compared to $34.1 million for the six months ended June 30, 2025. Management Fee expense was higher due to (i) a full quarter of the Management Agreement being in effect in the current-year period compared to only the period following the Spin-Off in the prior-year period, and (ii)

Current wording

Management Fee expense was $88.3 million for the nine months ended September 30, 2026, compared to $59.9 million for the nine months ended September 30, 2025. The increase was primarily attributable to (i) a full nine months of the Management Agreement being in effect during the current-year period compared to a partial post-Spin-Off period in the prior-year period and (ii) growth in Tangible Assets resulting from a higher number of homesites subject to option contracts.

Previous wording

Stock-based compensation expense related to RSUs granted to the Board was $0.2 million for the three months ended June 30, 2026, compared to $0.2 million for the three months ended June 30, 2025.

Current wording

Stock-based compensation expense related to RSUs granted to Board members was $1.2 million for the nine months ended September 30, 2026, compared to $0.4 million for the nine months ended September 30, 2025. The increase was primarily attributable to compensation expense recognized on additional RSU awards granted on December 10, 2025 and May 13, 2026.

Previous wording

Sales, general, and administrative expenses for the Predecessor Millrose Business included $8.9 million of stock-based compensation expense for the six months ended June 30, 2025. Stock-based compensation expense was allocated to the Predecessor Millrose Business on a specific identification basis or using a proportional cost allocation method, as applicable, as disclosed in the Form 10-K.

Current wording

Sales, general and administrative expenses of the Predecessor Millrose Business included $8.9 million of stock-based compensation expense for the nine months ended September 30, 2025. Such amounts were allocated to the Predecessor Millrose Business on a specific identification basis or using a proportional cost allocation methodology, as applicable, as disclosed in the Form 10-K.

Previous wording

Sales, general and administrative expenses from pre-spin periods were $25.0 million for the six months ended June 30, 2025. For the six months ended June 30, 2025, the expenses were allocated by Lennar for the period from January 1, 2025 to the Spin-Off. There were no sales, general and administrative expenses recorded after the Spin-Off.

Current wording

Sales, general and administrative expenses from pre-spin periods were $25.0 million for the nine months ended September 30, 2025. For the nine months ended September 30, 2025, the expenses were allocated by Lennar for the period from January 1, 2025 to the Spin-Off. There were no sales, general and administrative expenses recorded after the Spin-Off.

Previous wording

The provision for income taxes for the six months ended June 30, 2026 was $7.5 million, compared to $9.1 million for the six months ended June 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the six months ended June 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9%, compared to 24.8% for the six months ended June 30, 2025. See Note 10. Income Taxes in the condensed consolidated financial statements for more information.

Current wording

The provision for income taxes for the nine months ended September 30, 2026 was $12.4 million, compared to $15.0 million for the nine months ended September 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the nine months ended September 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9 %, compared to 24.8% for the nine months ended September 30, 2025. See Note 13. Income Taxes in the condensed consolidated financial statements for more information.

Previous wording

We calculate AFFO by starting with Nareit’s definition of funds from operations (“FFO”), which is the net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation, as applicable. During this period, there were no applicable adjustments to net income of the Company to calculate FFO. We then calculate AFFO by adjusting net income to eliminate the impact of non-recurring items that are not reflective of operations and certain non-cash items that reduce or increase net income (loss) in accordance with GAAP, and also adjusted for income tax expense (other than income tax expenses of our TRS) that will not be incurred following our election and qualifications to be subject to tax as a REIT for U.S. federal income tax purposes. As shown in the tables below, certain non-recurring and non-cash transactions added back for the three and six months ended June 30, 2026 and 2025 include non-cash components of compensation expense, amortization of financing and issuance costs for our Credit Agreement (including issuance costs incurred under the Company’s prior revolving credit facility before March 25, 2026) and Senior Notes, provision for (benefit from) credit loss expense, and non-recurring rating agency expenses related to the Spin-Off.

Current wording

We calculate AFFO by starting with Nareit’s definition of funds from operations (“FFO”), which is the net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation, as applicable. During this period, there were no applicable adjustments to net income of the Company to calculate FFO. We then calculate AFFO by adjusting net income to eliminate the impact of non-recurring items that are not reflective of operations and certain non-cash items that reduce or increase net income (loss) in accordance with GAAP. As shown in the tables below, certain non-recurring and non-cash transactions added back for the three and nine months ended September 30, 2026 and 2025 include non-cash components of compensation expense, amortization of financing and issuance costs for our Credit Agreement (including issuance costs incurred under the Company’s prior revolving credit facility before March 25, 2026) and Senior Notes, provision for (benefit from) credit loss expense, and non-recurring rating agency expenses related to the Spin-Off.

Previous wording

Reflected in interest expense in the consolidated statements of operations. See Note 8. Debt Obligations in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Current wording

Reflected in interest expense in the consolidated statements of operations. See Note 11. Debt in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Previous wording

Reflected in other expenses in the consolidated statements of operations. See Note 2. Basis of Presentation and Significant Accounting Policies, Other Income (Expense) net in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Current wording

Reflected in other expenses in the consolidated statements of operations. See Note 2. Basis of Presentation and Significant Accounting Policies, Other Income (Expense) in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Previous wording

The table below is a reconciliation of GAAP net income to AFFO and GAAP earnings per share to AFFO earnings per share for the six months ended June 30, 2026 and 2025:

Current wording

The table below is a reconciliation of GAAP net income to AFFO and GAAP earnings per share to AFFO earnings per share for the nine months ended September 30, 2026 and 2025:

Previous wording

Reflected in interest expense in the consolidated statements of operations. See Note 8. Debt Obligations in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Current wording

Reflected in interest expense in the consolidated statements of operations. See Note 11. Debt in the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Previous wording

As of June 30, 2026, we had $34.2 million cash on hand and approximately $850 million capacity under our Revolving Credit Facility and $500 million capacity under our DDTL Credit Facility. Our primary sources of liquidity are cash flows from operations and debt financing under our Revolving Credit Facility of $1.335 billion, our DDTL Credit Facility of $500 million, and our Senior Notes of $2.0 billion. We believe that our existing cash on hand, cash generated from operations and available capacity under the Revolving Credit Facility and DDTL Credit Facility will be sufficient to meet our liquidity needs in the short and long term. In the future, we may seek to further raise capital or engage in other forms of borrowings in order to fund future investments or to refinance existing indebtedness. Our ability to satisfy our liquidity requirements depends on our future operating performance, which is affected by prevailing economic conditions, market conditions in the real estate industry and other factors, many of which are beyond our control.

Current wording

We believe that our existing cash on hand, cash generated from operations and available capacity under the Revolving Credit Facility, DDTL Credit Facility, SFR Secured Credit Facility and 2026 Senior Notes will be sufficient to meet our liquidity needs in the short and long term. In the future, we may seek to further raise capital or engage in other forms of borrowings in order to fund future investments or to refinance existing indebtedness. Our ability to satisfy our liquidity requirements depends on our future operating performance, which is affected by prevailing economic conditions, market conditions in the real estate industry and other factors, many of which are beyond our control.

Previous wording

Our cash flows for the six months ended June 30, 2026 and 2025 were as follows:

Current wording

Our cash flows for the nine months ended September 30, 2026 and 2025 were as follows:

Previous wording

Net cash from operating activities was $1.683 billion for the six months ended June 30, 2026. Cash inflows included cash generated from takedowns of homesites under option contracts net of deposit credits, option fees from homesites under option contracts, interest paid-in-kind under our development loan agreements, and interest earned on cash held in our bank accounts for operating purposes. Cash outflows consisted of payments of the Management Fee, interest on debt obligations, and other operating expenses.

Current wording

Net cash from operating activities was $2.558 billion for the nine months ended September 30, 2026. Operating cash inflows primarily consisted of cash generated from takedowns of homesites under option contracts, net of deposit credits, option fees related to homesites under option contracts, interest received on development loan agreements, and interest earned on cash balances held in the Company's operating bank accounts. Operating cash outflows primarily consisted of Management Fee payments, interest payments on debt obligations and other operating expenses.

Previous wording

Net cash from operating activities was $1.610 billion for the six months ended June 30, 2025. Cash inflows included cash generated from takedowns of homesites under option contracts net of deposit credits, option fees from homesites under option contracts, interest paid-in-kind under our development loan agreements, and interest earned on cash held in our bank accounts for operating purposes. Cash flows from operating activities also included the Predecessor Millrose Business pre-Spin-Off net loss of $25.0 million. Cash outflows consisted of payments of the Management Fee and interest on debt obligations.

Current wording

Net cash from operating activities was $2.535 billion for the nine months ended September 30, 2025. Operating cash inflows primarily consisted of cash generated from takedowns of homesites under option contracts, net of deposit credits, option fees related to homesites under option contracts, interest received on development loan agreements, and interest earned on cash balances held in the Company's operating bank accounts. Operating cash flows also reflected the Predecessor Millrose Business pre-Spin-Off net loss of $25.0 million. Operating cash outflows primarily consisted of Management Fee payments and interest payments on debt obligations.

Previous wording

The increase in cash from operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily driven by (i) higher cash generated from option fees as a result of growth in homesites under option contracts, and (ii) higher interest paid-in kind under our development loan agreements. These increases were partially offset by (i) higher interest payments on debt obligations, and (ii) higher Management Fee payments due to higher Tangible Assets resulting from an increase in homesites under option contracts.

Current wording

The increase in cash provided by operating activities for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily driven by higher cash generated from option fees as a result of growth in homesites under option contracts. This increase was partially offset by (i) higher interest payments on debt obligations and (ii) higher Management Fee payments resulting from growth in Tangible Assets associated with an increase in homesites under option contracts.

Previous wording

Net cash used in investing activities was $1.797 billion for the six months ended June 30, 2026. Investing cash outflows consisted of cash used to acquire homesites for our homesite option platform net of option deposits, and loans made to counterparties under our development loan agreements. These investing cash outflows were partially offset by principal payments received from counterparties under our development loan agreements.

Current wording

Net cash used in investing activities was $3.369 billion for the nine months ended September 30, 2026. Investing cash outflows consisted primarily of cash used to acquire homesites for our homesite option platform, net of option deposits, loans made to counterparties under our development loan agreements, cash used for the acquisition of single-family residential properties, investments in preferred instruments, and property-related deposits. These investing cash outflows were partially offset by principal payments received from counterparties under our development loan agreements.

Previous wording

Net cash used in investing activities was $2.813 billion for the six months ended June 30, 2025. Investing cash outflows consisted of cash paid to acquire the Rausch homesites, cash used to acquire homesites net of option deposits, and loans made to counterparties under our development loan agreements. These investing cash outflows were partially offset by option deposit payments received related to the inventory contributed by Lennar at the Spin-Off and principal payments received from counterparties under our development loan agreements.

Current wording

Net cash used in investing activities was $4.390 billion for the nine months ended September 30, 2025. Investing cash outflows consisted of cash paid to acquire the Rausch homesites, cash used to acquire homesites net of option deposits, and loans made to counterparties under our development loan agreements. These investing cash outflows were partially offset by option deposit payments received related to the inventory contributed by Lennar at the Spin-Off and principal payments received from counterparties under our development loan agreements.