In the last week of Lennar's third fiscal quarter, Millrose Properties, the land-bank spinoff that Lennar's own CEO helps control, bought at least 356 of Lennar's finished homes, more than the 340-home cushion that let Lennar say it beat its delivery forecast.
Widen the lens and the pattern grows: Hunterbrook counted over 700 Millrose purchases across 51 counties in roughly a month, worth an estimated $200 million or more, from an entity whose founding SEC filing said it would never hold tenants or sign leases. Hunterbrook, which discloses that it is short both Lennar ($LEN) and Millrose ($MRP) and long a basket of comparable securities, argues the purchases look economically irrational for Millrose but convenient for a cash-strapped Lennar. Lennar could not be reached for comment on the report, per Hunterbrook.
Ticker: LEN (Lennar Corporation)
Research Firm: Hunterbrook
Report URL: https://hntrbrk.com/breaking-news/lennar-millrose?ref=shortreport.fyi
Position Disclosure: "At publication, it was short Millrose ($MRP), short Lennar ($LEN), and long a basket of comparable securities." (Hunterbrook Capital)
Thesis
Hunterbrook, a short seller in both Lennar and Millrose, alleges that Lennar used its land-bank spinoff as a related-party buyer of finished homes to mask soft demand and hit delivery guidance.
- Related-Party Buyer: Millrose subsidiary MRP Liberty made more than 700 purchases across at least 51 counties in 15 states in roughly a month, an estimated $200 million or more; annualized, that pace would equal about one-tenth of Lennar's quarterly deliveries and over 7% of home-sales revenue, with no comparable buyer found in Hunterbrook's sample.
- Delivery Cushion: At least 356 Millrose purchases landed in the final week of Lennar's fiscal quarter, which closed with 20,840 deliveries against a guidance floor of 20,500, a 340-home margin, even as Lennar missed four of its five other stated targets.
- Land Bank to Landlord: Millrose's 2025 10-K stated it would "not, and will not" have tenants or signed leases; on August 27 it amended its agreements to add "completed single family homes" as a permitted asset and allow rentals, disclosed only in a September 1 8-K, with one Arizona purchase dated before the amendment was even signed.
- Uneconomic Rentals: Estimated gross rental yields run about 8.4%, but after taxes, insurance, HOA fees, repairs and management fees, Hunterbrook puts the net return before financing near 5%, below the 6.5% to 6.75% rates on Millrose's September 22 bond issuance.
- Premium Pricing: Across 47 communities with public deed data, Millrose paid an average $290,661 per home versus an estimated $256,000 effective price for individual buyers after incentives, and about $277,000 versus KKR-linked Slate's $263,000 in communities where both bought.
- Cash-Strapped Seller: Lennar reported about $2.1 billion in fiscal-2025 profit but only $28 million of free cash flow, with homebuilding cash down to $1.2 billion from $3.4 billion, while continuing to pay Millrose roughly $43 million a month to hold land.
- Captive Spinoff: Lennar supplies 72% of Millrose's revenue and CEO Stuart Miller holds about 43% of Millrose's voting power; Millrose's own disclosures state its agreements with Lennar were not negotiated at arm's length and "may be considered more favorable to Lennar" than third-party terms, with manager Kennedy Lewis selected without a competitive process.
- Consolidation Red Flag: Accounting academics told Hunterbrook that Millrose buying homes at apparent losses to protect Lennar could show Lennar effectively controls Millrose, which would bar Lennar from booking those sales as revenue; Lennar has stated it lacks "the power" to direct Millrose. This is an allegation, not an established accounting finding.
Catalysts
- Upcoming Lennar disclosures: Lennar's next quarterly delivery, order, pricing, margin and cash-flow disclosures would show whether Millrose purchases keep supporting reported results.
- Millrose purchase and lease tracking: Continued Millrose home purchases, rental listings and lease-up progress under its stated rent-to-own pilot are trackable in upcoming Millrose filings.
- Future Lennar land actions: Lennar's future land purchases from Millrose, including any pause (which would halve affected option payments) or walkaway (which could trigger deposits, termination fees and impairments), could materially affect both entities.
- Accounting or regulatory scrutiny: Any accounting, audit or regulatory scrutiny of whether Lennar must consolidate Millrose would eliminate intercompany home sales from Lennar's reported revenue.
- Funding-cost pressure: Millrose's future borrowing costs versus its estimated roughly 5% pre-financing rental return will be relevant at its next bond or credit-facility pricing.
Company Response
Per Hunterbrook, Lennar could not be reached for comment on this report, though the firm notes Lennar proactively issued an 8-K disputing issues raised in a prior Hunterbrook article. Millrose did not respond to Hunterbrook's questions, including about the internal discussions behind its approval to buy and rent finished homes. Berkshire Hathaway, which increased its Lennar stake after the September 16 earnings release, did not reply to Hunterbrook's request for comment on whether it was aware of the Millrose purchases.
Notable Details
- Hunterbrook visited 36 Millrose-owned homes in Marion County, Florida and 39 in Princeton, Texas on consecutive days in late September; none appeared occupied, one Texas door was covered in spiderwebs, and only four of the 39 Texas homes had Zillow rental listings.
- In Marion County, Lennar transferred land to Millrose in August 2024, bought it back at roughly $49,500 per lot in 2025 and 2026 to build homes, then sold the finished houses to Millrose subsidiary MRP Liberty for an average $244,351.
- Berkshire Hathaway bought nearly $350 million of Lennar stock in the days after the September 16 earnings release, pushing its stake above 10 percent; Hunterbrook raises, without answering, whether Berkshire knew of the Millrose purchases.
- Millwood Estates resident Andrew Baird said neighbors had not realized the institutional buyer was tied to Lennar, calling it "a weird dynamic" and asking why Lennar was "buying your own homes"; Prosperity Lakes homeowner Kevin Franz said price cuts had left many residents "underwater."
"It's a round trip that would make Jensen Huang blush."
The author uses this line to frame the cycle in which Lennar's land-bank spinoff became a major buyer of Lennar's own finished homes.
FAQs
What is driving the allegations against Lennar (LEN) stock?
A research report alleges that Lennar's spinoff, Millrose, became an unusually large buyer of Lennar's finished homes at a time when Lennar was missing most of its homebuilding targets, with purchases concentrated heavily in the final week of the quarter. The report frames this as a related-party arrangement that may have flattered Lennar's reported delivery numbers.
What is Lennar Corporation's relationship with Millrose Properties?
Lennar spun off Millrose in 2025, transferring about $5.5 billion of land, roughly 87,000 homesites and $1 billion in cash, while retaining rights to buy lots back over time. Lennar remains Millrose's largest customer, supplying 72% of its revenue, and Lennar CEO Stuart Miller holds about 43% of Millrose's voting power, per Millrose's own disclosures.
What does Hunterbrook allege about Lennar and Millrose?
Hunterbrook alleges that Millrose's purchases of finished Lennar homes and its new rental strategy are economically unfavorable for Millrose but helped Lennar meet delivery guidance and generate cash during a demand slowdown. Hunterbrook discloses it is short both Lennar and Millrose and long a basket of comparable securities.
What is Millrose Properties and why did it start buying homes?
Millrose is a real estate investment trust spun off by Lennar to hold land and sell lots back to Lennar as needed; it has no employees and is externally managed by Kennedy Lewis, which Lennar selected without a competitive process. On August 27, Millrose amended its agreements to add completed homes as a permitted asset and allow rentals, a reversal from its 2025 10-K statement that it would never have tenants or leases.
Did Lennar use Millrose purchases to hit delivery targets?
Hunterbrook found at least 356 Millrose home purchases in the final week of Lennar's fiscal quarter, which closed with 20,840 deliveries versus a guidance floor of 20,500, a 340-home margin. Lennar missed four of its other five stated homebuilding targets that same quarter, according to its September 16 earnings release.
How did Lennar respond to the Hunterbrook report?
Hunterbrook states that Lennar could not be reached for comment on this report, and that Millrose likewise did not respond to questions about the decisions behind its rental purchases. Hunterbrook notes that Lennar has, in the past, issued an SEC filing disputing issues raised in a prior Hunterbrook investigation.
What is the rent-to-own pilot program at Millrose?
According to a September 30 Goldman Sachs note summarizing a Millrose management call, the company described a small pilot aimed at prospective buyers who cannot qualify for mortgages, originated internally at Millrose rather than by a builder, and said it currently charges no asset-management fee on the rental homes. Hunterbrook's own estimates of rental economics, by contrast, suggest returns below Millrose's borrowing costs.
Could Lennar be required to consolidate Millrose's financials?
Two accounting academics told Hunterbrook that Millrose's apparent willingness to buy homes at a loss to support Lennar could indicate Lennar exercises control over Millrose, which under accounting rules would bar Lennar from booking those sales as revenue. Lennar has stated it lacks "the power" to direct Millrose, and this remains an allegation rather than a confirmed accounting determination.
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