Millrose Lifts Revenue as Option Fees Reshape Mix
Homesite-sale proceeds climbed to about $1.03 billion as activity broadened beyond Lennar.
Millrose Properties (MRP), a land-banking real estate investment trust, reported a 32% rise in second-quarter revenue to $196.9 million as option fees drove growth.
Revenue advanced about 1% from the first quarter, extending the company's expansion at a slower sequential pace. Net income rose to $125.9 million, or $0.76 a share, from $122.9 million, or $0.74 a share, in the preceding period. A year earlier, Millrose earned $112.8 million, or $0.68 a share.
Option-fee revenue increased 39% from a year earlier to $195.4 million, shifting the business further toward that income stream. Development-loan income fell 82% to $1.5 million after the quarter began with about $284 million of early repayments. Development-loan receivables declined to $49.8 million at June 30 from $329.0 million at year-end.
Operating income rose 32% to $167.6 million, leaving the operating margin near 85%. Net-income growth trailed that pace as interest expense climbed to $40.0 million from $10.3 million a year earlier.
Adjusted funds from operations increased 11% from a year earlier to $127.6 million, or $0.77 a share, and edged up from $125.9 million, or $0.76 a share, in the first quarter. The company's quarterly AFFO run rate stands at $0.80 a share, the high end of its guidance.
Land-acquisition and development funding rose to $1.121 billion from $989 million sequentially, with increases in both the Lennar program and other agreements. Millrose expanded its counterparty base to 19 relationships from 17 and entered multifamily land banking through an agreement with JPI. The company plans to provide capital supporting Dream Finders Homes' proposed acquisition of Beazer Homes.
Millrose raised its quarterly dividend to $0.77 a share, its sixth consecutive increase. The portfolio's annualized yield held at 9.2%, though invested capital outside Lennar grew by $117 million, down from a $365 million increase in the first quarter, and the community count declined to 877 from 904.