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Basis of Presentation and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2025

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the financial statements of the Predecessor Millrose Business prior to the Spin-Off, which are derived from the accounting records of Lennar. Unless otherwise indicated, the financial information presented prior to the February 7, 2025 Spin-Off in this Form 10-K is that of Lennar. The Predecessor financial statements represent a combination of entities under common control that have been prepared under the legal entity method of carving out financial statements and have been prepared based on the assets transferred to Millrose in the Spin-Off. The Predecessor financial statements reflect the expenses directly attributable to the Predecessor Millrose Business, and, land inventory assets and liabilities included in the Spin-Off, at Lennar’s historical basis. The financial statements of the

Predecessor Millrose Business may not be indicative of Millrose’s future performance as an independent, publicly traded company following the Spin-Off and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had Millrose operated as a separate, publicly traded company during the periods presented. The basis of accounting for the Predecessor Millrose Business for the year ended December 31, 2025 includes an allocation of the average daily expense in 2024, using this allocation method, to the period of January 1, 2025 through February 7, 2025. See “Sales, General, and Administrative Expenses from Pre-Spin Period” in this Note 2 below for more information.

The consolidated financial statements after the Spin-Off include the accounts of the Company and its subsidiaries, including Millrose Holdings and other subsidiaries. The basis of presentation of significant accounting policies documented below includes that of Millrose after the Spin-Off as of December 31, 2025.

The Company consolidates all wholly-owned subsidiaries and all intercompany balances and transactions have been eliminated in consolidation.

Segment and Geographic Information

Prior to the Spin-Off, the Predecessor Millrose Business did not operate as a separate reportable segment. Following the Spin-Off, the Company operates and derives revenue primarily from its portfolio of homesites under option contracts. The Company also earns interest income on development loans secured by residential property.

As of December 31, 2025, the Company’s operations were conducted entirely in the United States with properties geographically located across 30 states. The Chief Executive Officer serves as the Company’s Chief Operating Decision Maker (the “CODM”) and evaluates performance and resource allocation on a portfolio basis. Additionally, the Company does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company has a single operating and reportable segment (the “Reporting Segment”) for disclosure purposes in accordance with GAAP.

The CODM evaluates the performance of Reporting Segment by analyzing the Company's consolidated financial statements. Net income attributable to Millrose, as presented on the Company’s consolidated statements of operations, is the primary metric utilized by the CODM to assess the Reporting Segment’s performance and to allocate resources. Total assets, as presented on the Company’s consolidated balance sheets, is used to measure the Reporting Segment’s assets.

The Company monitors major counterparties to assess potential risks to its financial position. For the year ended December 31, 2025, the Company derived a substantial portion of its revenues from Lennar, which represented $501.5 million, or 84%, of the Company's total revenues, and 88% of the Company's total option fee revenues.

The Company continuously monitors operations for any changes that may impact segment reporting as required under ASC 280 Segment Reporting.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The allowance for credit losses on development loan receivables and homesites under option contracts is a critical accounting estimate developed using a weighted average remaining maturity (“WARM”) methodology in accordance with ASC 326 Financial Instruments – Credit Losses (“CECL”). This methodology requires significant judgment in determining the annual charge-off rate, expected cash flows, and other qualitative adjustments. Additionally, determining whether option agreements should be accounted for under ASC 842 Leases requires the Company to apply significant judgment in evaluating the elements of control and economic benefits of the related assets.

The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2025. Actual results could differ from those estimates.

Cash

The Company considers all investments with an original maturity of three months or less to be cash and cash equivalents. Cash is recorded at cost, which approximates their fair values due to the short maturity period. As of December 31, 2025, cash was $35.0 million consisting of highly liquid deposit accounts. The Company held no cash equivalents or restricted cash balances at December 31, 2025. The Predecessor Millrose Business held no cash and cash equivalents at December 31, 2024.

Homesites Under Option Contracts

The Company enters into option agreements that grant homebuilders the right to direct the planning, use, and development of homesites subject to the option contracts. The Company evaluates its homesite option contracts at inception to determine if they contain a lease as defined under ASC 842. If the counterparty obtains substantially all of the economic benefits from use of the asset and has elements of control of the optioned assets, the Company accounts for homesites under option contracts in accordance with ASC 842. If the purchase options are reasonably certain of being exercised, the Company accounts for option fee contracts as sale-type leases under ASC 842.

Homesites under option contracts are recorded based on the Company's capital funded under the option contracts, which includes the land acquisition costs, qualifying development costs and other directly attributable costs. Option fee income is recognized over the term of the contract using an effective interest yield. Changes in monthly option fees due to reimbursable development costs, changes in takedown timing or volume, or other contractual adjustments are recognized prospectively through an updated effective interest yield over the term of the option contract. When a counterparty completes a takedown and homesites are transferred in accordance with the option contract, the Company derecognizes the related carrying amount from the balance sheet.

The Company evaluates the contractual right to receive future payments under option contracts for expected credit losses in accordance with ASC 326. The Company uses a WARM methodology, which applies an annual loss rate to the estimated remaining life of the related contract balance and is adjusted for expected cash flows and other qualitative factors which include the counterparties' payment performance, delinquencies or defaults since inception, historical charge off rates for residential housing, and cross-collateralization features across certain counterparty arrangements. The Company also considers the credit quality of its most significant counterparties.

The allowance for credit losses is presented as a contra-asset against the amortized cost basis of the related asset, and any changes in the allowance are recorded as a provision for credit loss expense within the Company's consolidated statements of operations.

See Note 4. Homesites Under Option Contracts for additional information.

Development Loan Income

The Company earns interest income on the outstanding loan balance of development loans secured by residential property. Development loan income is recorded in accordance with ASC 310 Receivables. The Company records the revenue on a monthly basis as the interest is earned. All interest earned is paid-in-kind (“PIK”).

For the year ended December 31, 2025, development loan income was $29.5 million. There was no development loan income recognized by the Predecessor Millrose Business for the years ended December 31, 2024 and December 31, 2023.

Development Loan Receivables, net

Development loan receivables, net are accounted for in accordance with ASC 310. These amounts include principal amounts due on development loans and the related interest receivable. Development loans are recorded at their amortized cost basis, representing the principal portion and capitalized PIK interest, net of principal payments and the allowance for credit losses. The following are the Company's development loans that are secured by residential properties as of December 31, 2025:


Description	Interest Rates	Maturity Date	Periodic Payment Terms (1)		Prior Liens			Face Amount			Carrying Amount			Principal Amount of Delinquent Loans
(in thousands)
Borrower A - Secured development loan; residential development projects located across multiple U.S. markets	12%	1/31/2026 (2)	P/I	$		—	$		287,748	$		287,748	$		—
Borrower B - Secured development loan; residential development projects located across multiple U.S. markets	12%	9/30/2029	P/I	$		—	$		35,560	$		35,560	$		—

(1)

P/I = principal and interest.

(2)

On January 29, 2026, the maturity date was extended between the Company and its counterparty to July 31, 2026.

The Company records an allowance for credit losses in accordance with ASC 326. The Company uses a WARM methodology which applies an annual charge-off rate to the estimated remaining life of development loans, adjusted for expected cash flows. The historical baseline is further adjusted for qualitative factors, including counterparties' consistent payment performance and broader market conditions affecting residential development activity. The Company includes accrued PIK interest in the amortized cost basis of the development loans for purposes of calculating the allowance for credit losses. The Company recorded an allowance for credit losses of $1.0 million as of December 31, 2025 in the consolidated statements of operations as an estimate of potential future losses.

The Company monitors the credit of its development loan portfolio on an ongoing basis, including evaluating timeliness of borrower payments. As of December 31, 2025, all development loans were current regarding their contractual payments.

Development loan receivables, net as of December 31, 2025 were as follows:


	At December 31,
(in thousands)	2025
Development loan principal receivables	$	323,308
Interest receivable paid-in-kind for development loans		6,696
Allowance for credit losses		(1,005	)
Total development loan receivables, net	$	328,999

The Predecessor Millrose Business did not have development loan receivables as of December 31, 2024 as there were no principal operating activities related to development loans.

The following table summarizes the activity in the Company's development loan receivables, net and the associated allowance for credit losses, which represents the Company's valuation account for these financial assets, for the year ended December 31, 2025:


	Year ended December 31,
(in thousands)	2025
Development Loan Receivables (Gross)
Balance at Spin-Off (February 7, 2025)	$	—
Investments in development loans		353,806
Paydowns of development loans		(53,306	)
Interest income on development loans		29,504
Ending gross balance at December 31, 2025	$	330,004

Allowance for Credit Losses
Balance at Spin-Off (February 7, 2025)	$	—
Additions: Provision for credit loss expense		1,005
Deductions: Write-offs/Charge-offs		—
Ending allowance for credit losses at December 31, 2025	$	1,005

Development loan receivables, net at December 31, 2025	$	328,999

The following table summarizes the scheduled contractual principal maturities of the Company's development loan receivables, net as of December 31, 2025. All development loans were originated in 2025 following the Spin-Off.


(in thousands)	Schedule of Principal Payments
2026	$	287,748
2027		—
2028		—
2029		35,560
2030		—
Thereafter		—
Total development loan principal receivables	$	323,308

Inventories

Inventories consist of land and land under development, and finished homesites of the Predecessor Millrose Business prior to the Spin-Off. The inventories of the Predecessor Millrose Business were not subject to purchase option contracts with homebuilders and therefore were accounted for in accordance with ASC 360 Property, Plant, and Equipment. Inventories of the Predecessor Millrose Business are stated at cost, which includes land acquisition costs, land development costs, and other costs directly attributable to land development.

During the pre-Spin-Off periods, the Predecessor Millrose Business reviewed for indicators of impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If indicators were present, the Predecessor Millrose Business performed a recoverability test using undiscounted future cash flows. If the carrying amount exceeded the undiscounted cash flows, the inventory was written down to fair value based on discounted cash flows or market data. There were no inventory valuation adjustments recorded by the Predecessor Millrose Business for the years ended December 31, 2024.

Builder Deposits

Builder deposits are option deposit payments received from counterparties under the Company’s option contracts. The Company records a liability for these deposits at the time of the counterparties deposit payments. When the counterparties exercise their purchase option and acquire the finished homesite, the builder deposits are applied to the total takedown price owed by the counterparty. The liability is reduced as takedown payments are made and when the corresponding homesites under option contracts are derecognized from the balance sheet. If counterparties do not exercise their purchase options, the deposit is forfeited as per the terms of the option contracts and recorded as income by the Company.

The following roll forward summarizes the change in builder deposits from the Spin-Off through December 31, 2025:


	Year ended December 31,
(in thousands)	2025
Beginning balance as of February 7, 2025 Spin-Off date	$	—
Builder deposits, Spin-Off		584,848
Builder deposits, Rausch land acquisition		90,264
Builder deposits, additions		416,994
Homesite takedowns, options exercised		(165,102	)
Total builder deposits	$	927,004

Debt Issuance and Financing Costs

The Company records debt issuance and financing costs in accordance with ASC 835 Interest.

Issuance costs for the DDTL Credit Facility (as defined below) and Senior Notes (as defined below) are recorded as a direct deduction of the carrying value of the debt liability and are classified as debt obligations, net in the Company’s consolidated balance sheets. These costs are amortized to interest expense on a straight-line basis over the contractual life of the debt as it approximates the effective interest method. As of December 31, 2025, issuance costs for the Senior Notes recorded as a direct deduction of debt, net of accumulated amortization, were $30.9 million.

During the third quarter of 2025, as a result of the August 2025 Offering and the September 2025 Offering (as described below), and in accordance with the First Amendment to DDTL (as described below), the Company fully repaid the remaining outstanding principal balance and interest on the DDTL Credit Facility. In connection with the repayment and in accordance with ASC 835, the Company recorded the remaining unamortized issuance costs of $11.9 million to interest expense in the Company’s consolidated statements of operations.

Financing costs for the Revolving Credit Facility (as defined below) are classified as other assets in the Company’s consolidated balance sheets as the costs represent a future economic benefit which provides the Company access to capital over the contractual term. These costs are amortized to interest expense on a straight-line basis over the term of the Revolving Credit Facility as it approximates the effective interest method. As of December 31, 2025, financing costs recorded as other assets, net of accumulated amortization, were $6.9 million for the Revolving Credit Facility.

For additional information, see Note 8. Debt Obligations.

Development Guarantee Holdback Liability

As of December 31, 2025, the Company recorded a holdback liability of $100 million related to a site improvement guarantee (the “Site Improvement Guarantee Amount”) owed to Rausch pursuant to terms of the transaction documents for the acquisition of the Rausch land assets by the Company (the “Transaction Documents”). The Site Improvement Guarantee Amount is due within ten business days of the date that is the later of (i) two years

following February 10, 2025, and (ii) the date on which development of 50% of certain assets subject to the Transaction Documents (the “Guaranteed Assets”) has been completed. The amount to be paid to Rausch pursuant to the Transaction Documents is the Site Improvement Guarantee Amount, less the aggregate amount by which actual development costs exceed the budgeted development costs for the Guaranteed Assets or such lesser amounts as may be designated in writing by Rausch.

Management Fee Expense

Pursuant to the Management Agreement, the Company pays KL a management fee in an amount equal to 1.25% per annum (0.3125% per quarter) of Tangible Assets, as defined in the Management Agreement (the “Management Fee”). The Management Fee is due and payable quarterly in advance as of the first day of each quarter and is reviewed by the Company's Board of Directors (the “Board”).

Except for certain reimbursable expenses, all expenses incurred by Millrose and its subsidiaries in the ordinary course of business are covered under the Management Fee, including the costs of all administrative and operating functions and systems, office space and office equipment, public company expenses, expenses incurred in maintaining the Company’s REIT status, compensation and fees paid to officers, employees, directors, vendors, consultants, advisors, and other outside professionals. All personnel are employed by KL or an affiliate of KL, and their salaries are paid by KL or the relevant affiliate of KL; therefore the Company does not record personnel-related expenses, including salaries, benefits, and share-based compensation for any employees. All cash compensation and fees paid to the Board are also paid by KL and 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, and, in certain circumstances, costs associated with the ownership and maintenance of land.

The Management Fee for the year ended December 31, 2025 was $87.8 million, which covers the period from the Spin-Off date of February 7, 2025 through December 31, 2025 based on the number of days that the Management Agreement was in effect.

Stock-Based Compensation

On December 17, 2024, the Company’s sole stockholder at the time and its Board adopted the Millrose Properties, Inc. 2024 Omnibus Incentive Plan (the “2024 Incentive Plan”). The 2024 Incentive Plan authorizes the award of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. The Company had 60,555 RSU awards outstanding under the 2024 Incentive Plan as of December 31, 2025.

In accordance with ASC 718 Compensation- Stock Compensation, the Company accounts for stock-based compensation based on the grant date fair value and amortizes the costs on a straight-line basis over the vesting terms as stock-based compensation expense and as additional paid-in capital. See Note 12. Stock-Based Compensation for additional information.

Sales, General, and Administrative Expenses from Pre-Spin Periods

Sales, general, and administrative expenses from pre-spin period are costs directly attributable to the Predecessor Millrose Business prior to the Spin-Off, and include pre-Spin-Off operating and employee compensation costs for dedicated regional and divisional land teams tasked with acquiring and developing the homesites Lennar transferred to Millrose in the Spin-Off. For the year ended December 31, 2025, these expenses were allocated to the Predecessor Millrose Business on a specific identification basis or, when specific identification was not practicable, a proportional cost allocation method primarily based on headcount, usage, or other allocation methods depending on the nature of the services. For the year ended December 31, 2025, these expenses included an allocation for the period from January 1, 2025 through February 7, 2025 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. The Company believes the allocation is representative in all material respects to the costs that

are directly attributable to the Predecessor Millrose Business for the period from January 1, 2025 through February 7, 2025. Sales, general, and administrative expenses from pre-spin period were $25.0 million for the period of January 1, 2025 through February 7, 2025. Sales, general, and administrative expenses for the year ended December 31, 2024 and 2023 were $246.2 million and $209.8 million, respectively.

Income Taxes

The Company records income taxes using the asset and liability method set under ASC 740 Accounting for Income Taxes. Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss and tax credit carryforwards as applicable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the year in which the temporary differences are expected to be recovered or paid. The effect of the change in tax rates is recognized in earnings in the period when the changes are enacted. Interest related to unrecognized tax benefits is recognized in the financial statements as a component of income tax expense.

Deferred tax assets are recognized to the extent that it is more likely than not that they will be realized. The Company reviews the potential realization of deferred tax assets and establishes a valuation allowance to reduce the deferred tax assets if it is determined more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company considers all available positive and negative evidence, including recent financial performance, actual earnings (losses), future reversals of existing temporary differences, projected future taxable income, and tax planning strategies.

Millrose intends to elect to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2025. As Millrose qualifies as a REIT, it generally will not be subject to U.S. federal income tax on its net income that it distributes to its stockholders. To maintain its qualification as a REIT, Millrose will be required under the Code to distribute at least 90% of its REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to its stockholders and meet certain other requirements. If the Company fails to maintain its qualification as a REIT in any taxable year, it will then be subject to federal income taxes on its taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants Millrose relief under certain statutory provisions. Such an event could have a material adverse effect on its net income and net cash available for distribution to its members.

Millrose intends to elect for its wholly owned subsidiaries MPH Parent and Millrose Holdings as well as its indirectly wholly owned subsidiary RCH Holdings, Inc. to be taxable as taxable REIT subsidiaries (“TRSs”) and may form or acquire other direct or indirect wholly owned subsidiaries that will also elect to be taxed as TRSs in the future. TRSs are subject to taxation at regular corporate income tax rates.

See Note 10. Income Taxes for additional information.

Other Income (Expense)

The Company records revenue and expenses that are not directly related to the core operations of the Company as other income (expense). Other income (expense) for the year ended December 31, 2025 was $85.7 million expense and included interest expense of $91.8 million for the Revolving Credit Facility, DDTL Credit Agreement, and Senior Notes, other expenses of $1.6 million, offset by interest income of $7.7 million related to cash balances. Interest expense for the year ended December 31, 2025 included $11.9 million of accelerated issuance cost amortization for the DDTL Credit Agreement as a result of the mandatory prepayment and paydown of the full outstanding principal amount of the loans outstanding under the DDTL Credit Agreement and all other outstanding obligations thereunder with the net proceeds from the September 2025 Offering on the date of such offering. See Note 8. Debt Obligations for further description of the September 2025 Offering.

Fair Value Measurements

Certain assets and liabilities are required to be reported at fair value under GAAP. The framework for determining fair value provided by GAAP prioritizes the inputs used in measuring fair value as follows:

•

Level 1: Fair value determined based on quoted prices in active markets for identical assets or liabilities.

•

Level 2: Fair value determined using significant other observable inputs.

•

Level 3: Fair value using significant other unobservable inputs.

As of December 31, 2025 and December 31, 2024, the Company did not measure any assets or liabilities at fair value on a recurring or nonrecurring basis.

Other liabilities approximate their fair value due to their short-term nature. Debt obligations, net approximate their fair value. The Company’s Revolving Credit Facility bears interest at variable rates that reset periodically; and therefore, approximates fair value. The Company’s Senior Notes approximates fair value as of the reporting date because the notes were issued at market terms during 2025 and any differences between carrying value and estimated fair value are not expected to be material.

Recent Accounting Standards

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”), which requires disclosure of disaggregated information about certain income statement expense line items in the notes to the financial statements on an interim and annual basis. ASU 2024-03 will be effective for the Company’s fiscal year ending December 31, 2027. Early adoption is permitted. The Company has elected not to early adopt and is currently evaluating the potential impact of ASU 2024-03 on its financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires public companies to annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for the Company’s fiscal year ended December 31, 2025. The Company adopted ASU 2023-09 in the year ended December 31, 2025 on a prospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements; the required enhanced disclosures are included in Note 10. Income Taxes.

In November 2025, the FASB issued ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans (“ASU 2025‑08”), which amends accounting for certain acquired loans. ASU 2025‑08 expands the “gross‑up” method under ASC 326, previously limited to purchased credit-deteriorated (PCD) assets, to include certain purchased seasoned loans, eliminating Day 1 credit loss expense and aligning the treatment with that of PCD assets. The update is effective for interim and annual reporting periods beginning after December 15, 2026, with prospective application; early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2025‑08 on its financial statements and disclosures.