Lennar Files To Spin Off Land Holdings Into $5B REIT

One of the country’s largest homebuilders has filed to spin off its land holdings into a new publicly traded company.

Miami-based Lennar Corp. is spinning off $5B to $6B in developable and prospective homesites into a REIT called Millrose. 

Millrose won’t undertake any development activities but would act as a holding company to acquire and sell land to Lennar and use the recycled capital to fund future transactions. Millrose filed an S-11 form with the Securities and Exchange Commission Wednesday laying out its intentions. 

In a letter to its stockholders that was included in the filing, Lennar said that while “traditional land banks” need to raise new money from investors, Millrose will use a recycling structure for its acquisitions. 

“While traditional land banks generally cannot engage in additional Land Banking without raising new investor funds, leaving them vulnerable to market dynamics and investor preferences, Millrose’s recycled capital structure should provide home builders with consistent access to capital, even during periods of market downturn or continued periods of depressed market conditions,” the company said. 

Lennar plans to distribute approximately 80% of Millrose’s common stock to Lennar Class A and Class B common stockholders and dispose of the remaining 20% through another transaction. The deal isn't final until Lennar’s board of directors approves it. 

Lennar had discussed its intentions for the Millrose spinoff in its second-quarter filing with the SEC.

“The goal of the spin-off is to generally complete our migration to an asset-light operating model by spinning off much of our land assets from our balance sheet,” it said at the time. 

As of last December, Lennar was marketing 11,000 apartments for sale and expected the portfolio could bring in $4.5B. The company sold more than 5,000 units for $2.1B through its multifamily arm, Quarterra, this past summer.