Millrose Properties, the Miami-based land-banking REIT that Lennar spun off in February 2025, is facing a securities fraud class action from shareholders who say the company quietly became a landlord after telling them it never would.
The suit covers investors who bought Millrose stock between Feb. 7, 2025 β the day Lennar distributed the shares β and Oct. 2, 2026. According to a notice issued Oct. 12 by Rosen Law Firm, the complaint alleges Millrose failed to disclose that it would enter lease agreements and have tenants, that it would buy $200 million of completed properties from Lennar, and that it would lease those homes at a loss. Anyone seeking to serve as lead plaintiff must move the court by Dec. 8. The allegations are unproven, and Millrose has not responded to them in a securities filing.
What is not in dispute is the documentary record, and it is unusually stark.
What Millrose told investors
Millrose’s first annual report, filed with the Securities and Exchange Commission on March 31, 2025, is explicit. “We do not, and will not, have any lease agreements with respect to the Transferred Assets and the Supplemental Transferred Assets, do not intend to enter into any lease agreements in the foreseeable future and do not, and will not, have any tenants or occupants on any of the properties in the Real Estate Portfolio,” the filing states. It adds: “Furthermore, we do not expect leases and occupancy to be within the scope of our Property Use Objective for the foreseeable future.”
That was the whole pitch. Millrose was built to hold raw land and finished homesites and collect option fees from homebuilders β principally Lennar, its former parent and largest customer β rather than rent from tenants. The same 10-K draws the contrast itself, noting that income for traditional property REITs comes “through rental payments received from tenants occupying properties within their portfolio” and that Millrose instead expected a model resembling the predictability of those rents without the rents themselves.
What changed, and where it was disclosed
On Aug. 27, 2026, Millrose amended two of its foundational contracts. The amendments were reported in an 8-K filed Sept. 1, which describes them in procedural terms: adjustments to the “Priority Amount” under the Founder’s Rights Agreement with Lennar subsidiaries, and changes to “the scope of the investment guidelines and the definition of Reimbursable Expenses” in the management agreement with external manager Kennedy Lewis Land and Residential Advisors LLC.
The substance sits in the exhibits. The Founder’s Rights Agreement amendment adds a new defined term: “‘BTR Properties’ refers to completed single family homes acquired by the Company or Company Affiliates and intended to be operated by the Company or a Company Affiliates as rental properties.”
The management agreement amendment goes further. It rewrites Millrose’s investment guidelines to authorize it to “Invest in real estate assets with a primary planned use as homesites for single-family detached and/or attached homes, including without limitation single family homes to be held and operated as rental properties pursuant to an approved single family home rental strategy.” It also expands reimbursable expenses to cover “property level operating expenses related to the maintenance, management, acquisition and disposition of single family rental properties,” itemizing third-party property management, repairs, insurance, homeowners association dues, property taxes, and “leasing and turnover costs.”
Those are the line items of a rental business. None of them appear in the narrative section of the 8-K that disclosed the amendments.
Nor do they appear in Millrose’s most recent quarterly report. The 10-Q for the quarter ended June 30, 2026 contains no reference to rental revenue, rental properties or tenants. “Our primary source of revenue is income generated from holding land under option contracts,” it says. The quarter closed two months before the amendments were signed, so the filing is not inconsistent with them β but it means investors reading Millrose’s own financial statements in 2026 have not yet seen a single dollar of rental activity described.
The report that triggered it
The class period ends on the day Hunterbrook Media published its findings. In a report dated Oct. 2, 2026, the outlet said a review of county deed records identified more than 700 purchases of Lennar homes by Millrose across at least 51 counties in 15 states, worth an estimated $200 million or more, concentrated in roughly a month from August to late September. It reported that at least 356 of those sales closed in the final week of Lennar’s fiscal quarter, and estimated that the homes would return about 5% a year before interest and corporate costs β below the 6.5% to 6.75% coupons on Millrose’s own notes. A follow-up report put the count at 1,096 transaction records across 16 states worth roughly $290 million.
Hunterbrook disclosed that its affiliated fund, Hunterbrook Capital, was short both Millrose and Lennar at publication and long a basket of comparable securities. Readers should weigh the findings against that position. Hunterbrook said Millrose did not respond to its questions and that Lennar could not be reached.
Millrose shares closed at $24.61 on Oct. 2 and at $22.51 on the next trading day, Oct. 5 β a decline of $2.10, or roughly 8.5%. The stock closed at $22.30 on Oct. 12.
Why the structure matters
Millrose is not a small experiment. RealtyWire has reported that the company grew to $9.7 billion in homesites and that it was raising $1 billion in senior notes, part of it tied to financing Dream Finders Homes’ bid for Beazer Homes. Land banks of that scale now sit between builders and their balance sheets across much of the industry.
Hunterbrook also noted the timing against Lennar’s own numbers: the builder reported 20,840 deliveries for the quarter against a forecast of at least 20,500, a cushion of 340 homes, and met only one of five homebuilding targets. Hunterbrook drew the inference that the quarter-end purchases mattered to that result; Lennar has said it lacks “the power” to direct Millrose.
The documented structure is what makes the complaint worth watching regardless of how it is resolved. Millrose’s external manager, Kennedy Lewis, acted as a strategic adviser to Lennar on the spin-off, as Millrose’s own 10-K discloses. Lennar is Millrose’s largest customer. And the amendment that opened the door to rental homes was signed with Lennar subsidiaries on the other side of the table. On our reading, those three facts together are why an accounting question about where finished homes went has turned into a securities case.
It also lands at an awkward moment for institutional ownership of single-family homes. RealtyWire has been tracking the Treasury Department’s work on a rule restricting investors who own more than 350 homes. A REIT that told the market it would never have a tenant, and is now alleged to be assembling a rental portfolio from its former parent’s inventory, is an uncomfortable test case for that policy. Further coverage is in RealtyWire’s housing market section.
