Millrose Properties, Inc. (NYSE:MRP) Q3 2025 Earnings Call Transcript

Millrose Properties, Inc. (NYSE:MRP) Q3 2025 Earnings Call Transcript October 23, 2025

Millrose Properties, Inc. misses on earnings expectations. Reported EPS is $0.633 EPS, expectations were $0.74.

Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Millrose Properties Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions]. I will now turn the call over to Jesse Ross, Millrose’s Head of Financial Planning and Analysis. Jesse, you may begin.

Jesse Ross: Good morning. Thank you for joining us. With us today to discuss our third quarter 2025 results are Darren Richman, our Chief Executive Officer and President; Robert Nitkin, our Chief Operating Officer; Garett Rosenblum, our Chief Financial Officer; Adil Pasha, our Chief Technology Officer; and [ Steven Hensley ], our senior market risk analysts. Before we begin, I’d like to remind everyone that this call may include forward-looking statements and discuss non-GAAP financial measures. Please refer to our third quarter 2025 financial and operational results announcement as well as the third quarter and investor presentation, we released and posted on our website under the Investor Relations heading for a discussion of these matters. With that, I’ll turn the call over to Darren.

Darren Richman: Thank you, Jesse, and good morning, everyone. I’m pleased to report that Millrose delivered another strong quarter, demonstrating the effectiveness of our disciplined capital deployment strategy, and the growing demand for our homesite option platform. Our approach centers on recycling homesite sale proceeds and investing newly raised capital to maximize returns for our shareholders. This quarter, we generated $852 million in net cash proceeds from homesite sales, including $766 million from Lennar and redeployed $858 million in new land acquisitions and development funding with Lennar. We also saw $770 million in funding outside the Lennar Master Program Agreement, which underscores the broad-based market demand and scalability of our platform.

As we continue to expand our homebuilder relationships, we now partner with 12 distinct counterparties. Our invested capital outside Lennar reached $1.8 billion with homesite inventory and other related assets totaling $2 billion at a weighted average yield of 11.3%. Our portfolio now spans approximately 139,000 homesites across 876 communities in 30 states, reflecting our national reach and operational excellence. A key differentiator for Millrose is our proprietary technology platform. This strategic asset enables us to manage nearly 140,000 homesites, automate transaction management and leverage AI for unique market insights and operational efficiency. Our technology allows us to scale faster, integrate acquisitions seamlessly and deliver unmatched agility to our builder partners.

It also provides early warning indicators in real time when we see pace and price failing to meet underwriting expectations. This allows us to constantly recalibrate our due diligence monitors using real-time information. We have Adil Pasha, our CTO on hand to profile our systems and the strategic moat that it represents. Our disciplined underwriting and risk management are essential to our business model. By structuring transactions with meaningful deposits and cross-termination pooling mechanisms, we continue to mitigate risk and maintain prudent standards even as we grow. We further strengthened our balance sheet this quarter by completing $2 billion in senior note offerings, replacing short-term bridge capital with long-term debt at favorable rates.

With approximately $1.6 billion in total liquidity and a conservative debt to capitalization ratio of 25%, Millrose is well positioned for continued growth and capital efficiency. Millrose is pioneering a new era in institutional end banking, offering a scalable, asset-light capital solution for homebuilders. As the only national public platform dedicated solely to residential homesite capital, we provide certainty and reliability that private capital sources cannot match. Our partners consistently tell us that this certainty is a key reason they choose Millrose. Despite ongoing market challenges, our business model resilience and risk mitigation features have enabled us to deliver strong performance and expand our partnerships. We maintain high conviction in the long-term housing market and are confident that Millrose is exceptionally well positioned to capture accelerated demand as conditions improve.

Our platform is helping builders navigate affordability pressures and inventory challenges, providing flexible capital solutions that support their growth and operational efficiency. It is important to highlight that we are quickly approaching the point of terminal velocity where shareholders will benefit from the optimization of our balance sheet for an entire fiscal period. As our capital structure reaches its most efficient state, we anticipate that shareholders will increasingly realize the benefits of our scale and disciplined approach, enabling us to reinvest in higher return opportunities and maintain robust liquidity, all while supporting our competitive position in the sector. With these advantages, we are confident that we can continue to deliver value for our partners and stakeholders as we pioneer new solutions in institutional land banking and further solidify our leadership in the market.

Our strong operational results enabled us to increase our quarterly dividend to $0.73 per share, representing an 8.2% dividend yield based on our book value. Based on our momentum, we are raising our guidance for year-end AFFO run rate to $0.74 to $0.76 per share and increasing our full year 2025 new transaction funding target under Other Agreements to $2.2 billion. We are pleased to note that this target is above our reach goal of $2 billion. We remain committed to distributing 100% of our AFFO to shareholders, reinforcing our alignment with shareholder interests. In closing, our third quarter results demonstrate that our capital redeployment strategy is working effectively across all aspects of our business. We look forward to continuing this momentum and sharing our progress next quarter.

Thank you for your continued support. And with that, I’ll hand the call over to Rob.

Robert Nitkin: Thank you, Darren, and good morning, everyone. I’m pleased to report on the operational progress we achieved in the third quarter and to share how we believe these initiatives position Millrose for continued success. Q3 was an active and productive quarter for Millrose. We deployed capital at scale, expanded partnerships with new counterparties and reinforced underwriting discipline as our national team continued to leverage the Millrose technology platform to rigorously evaluate each transaction. We also strengthened our balance sheet, raising $2 billion of long-term debt at highly accretive rates. As Darren noted, our performance was fueled by accelerating transaction volumes and growing industry-wide adoption of our platform.

Millrose was founded on the vision that a scaled national publicly traded homesite capital solution could be an all-weather solution to deliver homesites on a just-in-time basis, and that vision is now being realized. Today, Millrose transact with 12 distinct counterparties. And as we engage with our growing roster of homebuilder partners, we increasingly hear them highlight Millrose’s advantages over other private capital players. With unmatched scale, a national team of industry experts and a portfolio spanning 30 states and 876 communities, we can execute the broadest range of transactions with speed and deep sector expertise. As a permanent capital solution dedicated to serving as the industry solution for residential home site capital, our partners avoid the constraints of private fund life cycle and the uncertainty of opaque capital sources.

Builders consistently tell us that certainty and reliability of capital often matters more than cost. With $2 billion raised in the quarter and $1.6 billion of publicly disclosed liquidity today, we deliver that certainty. Finally, as you’ll hear from our Chief Technology Officer, Adil Pasha, our technology platform reduces the operational burden on counterparties land planning and finance team by automating homesite purchase coordination and processing. At the same time, it captures transaction data that provides unique market insights to strengthen our underwriting. We believe that these structural advantages make Millrose the partner of choice for leading homebuilders. This is exemplified by large programmatic partnerships, such as our collaboration with Taylor Morrison’s Yardly build-to-rent brand as well as our demonstrated experience as the first call for capital-efficient M&A.

The strength of our platform is evident in our transaction terms and portfolio performance. We continue to generate compelling returns with a weighted average yield outside the Lennar Master Program Agreement of 11.3% as of quarter end. We grew investments in this category by $770 million in acquisitions and development funding, bringing our invested capital to approximately $1.8 billion as of September 30. Including Lennar, our portfolio weighted average annualized yield rose to 9.1%, up 20 basis points from the prior quarter. While growth is important, we remain laser-focused on underwriting discipline. And as our portfolio expands, we continue to enhance our risk monitoring systems. Each transaction is evaluated against real-time sales and pricing trends within our portfolio with overlaid local market insights from our asset management team.

Our asset managers are constantly engaging with counterparties across the country, interfacing directly with the individual local builder divisions of our homebuilder partners. Through these channels, we’ve been able to capture unique quantitative and qualitative insights about the operating environment across markets and leverage these insights to maintain prudent underwriting standards and monitor risk. We also continue to structure transactions to mitigate risk, securing meaningful deposits as a share of total project costs and employing cross-termination pooling mechanisms. Importantly, given the demand we have observed, we also have the ability to remain selective in our partnerships, avoiding builders who view land banking as a tool for risk mitigation rather than capital and operating efficiency.

This has helped to buttress our portfolio during the recent market stress. We are proud of our third quarter performance and grateful for the significant contributions of the entire Millrose team in driving our continued growth. With the strength of our pipeline, capital capacity and competitive position, we remain highly optimistic going forward. With that, I’ll turn it over to Adil to share more on the Millrose technology platform.

Adil Pasha: Thanks, Rob. I want to highlight a core component of our strategy, the proprietary technology platform that complements the operational excellence of our servicing and investment teams. We are not simply building a tool, but a strategic moat that enables us to manage the scale and complexity unmatched in the land banking industry. To put our operations into perspective, we manage a portfolio of nearly 140,000 homesites. We recycle approximately 1/3 of our book value annually, which means we are in a constant cycle of redeploying capital with speed and precision. Our transactions typically range from $10 million to $30 million each. We serve 12 distinct customers with more than 800 assets across diverse geographies and product types.

Managing this business on spreadsheets would be impossible. Our technology platform provides 3 distinct strategic advantages. First, high velocity transaction processing. In the third quarter alone, we averaged 138 homesite takedowns per business day and processed over 3,500 land and development transactions. Land banking relies on seamless technological and operational alignment with our builders. Our platform allows us to provide our builder partners with the operational flexibility they need to meet their goals. A level of agility that is simply unachievable with traditional systems and spreadsheets. Enhancing and expanding these integrations is a key priority, which we believe will unlock further growth and strengthen these critical partnerships.

Second, a powerful data advantage. The sheer volume of our deal flow, transaction data and builder sales reports have created a rich proprietary data set. This data moat gives us unique insights in underwriting transactions and monitoring market risk. We are also beginning to leverage AI to drive novel insights from this data set and further automate internal processes. Finally, unmatched M&A execution. We demonstrated this with the Millrose spin-off and the acquisition of Rausch and supporting New Home in its acquisition of Landsea. Our ability to partner with builders to rapidly underwrite and integrate hundreds of communities is a direct result of our proprietary data platform, which automates the ingestion and management of all aspects of land banking data.

Our capacity to close deals and provide immediate operational readiness for our builders is an unmatched capability in this market. Our technology is a core strategic asset. It allows us to scale faster, integrate acquisitions seamlessly and operate with greater agility. We are confident this platform provides a durable competitive advantage that our competitors cannot easily replicate. We look forward to releasing a set of features to extend these efficiencies directly to our builder partners. We are excited to continue developing this platform to drive the future growth of Millrose. With that, I’ll hand it over to Garett to talk through our quarterly financial overview.

Garett Rosenblum: Thank you, Adil, and good morning, everyone. I’m pleased to walk you through our third quarter 2025 financial performance, which demonstrates the cash-generating power of our business model and our disciplined approach to capital allocation. For the third quarter, we reported net income attributable to Millrose’s common shareholders of $105.1 million or $0.63 per share, driven by $179 million in option fees and development loan income. Our net income this quarter was negatively impacted by onetime expenses associated with our debt financing activities. These nonrecurring expenses related to our debt transactions impacted our GAAP net income. These are onetime items incurred in connection with our business reaching scale and don’t affect the underlying cash-generating capacity of our business.

Adjusted funds from operations, or AFFO, was $122.5 million or $0.74 per share, which provides the basis of our distributable earnings by adjusting for these onetime costs and other noncash items. As we discussed last quarter, AFFO offers enhanced transparency into the recurring distributable earnings power of our business. Our book value per share at the end of the quarter stood at $35.29. Our management fee expense was $25.9 million, which is calculated transparently at 1.25% of gross tangible assets. Interest expense was $43.7 million and income tax expense was $5.9 million. On September 22, we declared a quarterly dividend of $121.2 million or $0.73 per share, representing an 8.2% dividend yield based on book value per share that demonstrates our strong profitability and commitment to shareholder value.

Millrose is committed to distributing 100% of our earnings to shareholders. Turning to our balance sheet and capitalization. We significantly strengthened our financial position this quarter through a strategic debt raise. We successfully completed $2 billion in senior note offerings, including $1.25 billion of 6.38% Senior Notes due 2030 and $750 million of 6.25% Senior Notes due 2032, both upsized due to strong investor demand. We used the proceeds to repay our $1 billion 1-year term loan and reduced outstanding borrowings under our revolving credit facility by $450 million. These transactions eliminated near-term refinancing risk while securing attractive long-term financing and combined with our $1.3 billion revolving credit facility provide us with approximately $1.6 billion in total liquidity as of quarter end, which provides ample financial resources to continue to grow the business.

As of September 30, we reported total assets of approximately $9 billion and total debt of $2 billion with a debt-to-capitalization ratio of approximately 25%. We continue to expect to adhere to a conservative maximum debt to capitalization ratio of 33%, underscoring our disciplined approach to capital management. Based on our strong performance and continued momentum in other agreements, we are raising our guidance for full year 2025 new transaction funding under other agreements to $2.2 billion, up from previous guidance. Accordingly, we are also raising our year-end AFFO quarterly run rate guidance to a range of $0.74 to $0.76 per share. We remain focused on delivering value to shareholders through consistent earnings growth, prudent capital allocation and maintaining our conservative balance sheet while capitalizing on the significant opportunities ahead.

With that, I’ll turn the call back to Darren.

Darren Richman: To close, our third quarter results demonstrate that our capital redeployment strategy is working effectively across all aspects of our business. From an organic growth and other agreements to optimizing our capital structure and increasing shareholder returns, we continue to execute on our mission to redefine how capital flows to meet housing demand. Our business model’s resilience through challenging market conditions, combined with our strong liquidity position and growing pipeline of opportunities gives us confidence in our ability to continue delivering attractive returns to shareholders, while serving as an essential capital partner to the homebuilding industry. We look forward to continuing this momentum and sharing our progress next quarter. Thank you again for your continued support. And with that, operator, let’s open the call up to Q&A.

Q&A Session

Operator: [Operator Instructions] Your first question comes from Julien Blouin with Goldman Sachs.

Julien Blouin: So your new deployment guidance of $2.2 billion implies just another $200 million of deployment in the fourth quarter, which is quite a bit below your year-to-date run rate. I guess, is that a reflection of a pullback in activity you’re seeing from homebuilders? Or is there some sort of like normal seasonality or activity dips in the fourth quarter? Is it driven by conservatism? How should we sort of think about that?

Robert Nitkin: Yes, sure. Thanks for the question, Julien. So just 1 quick correction. So as of the end of the third quarter, our invested capital in this category outside of Lennar Master Program Agreement is $1.8 billion. So originally, our stretched target was $2 billion. It’s $1.8 billion as of the end of the third quarter. And so our revised target is $2.2 billion, meaning that it’s not a $200 million increase. We’re guiding towards the $400 million increase. And that’s our best guess based on still a very strong continued set of demand from the builders, certainly no slowdown, but that’s our best guess based on where we are today. Does that make sense?

Julien Blouin: Yes. Okay. I see. So it’s $2 billion of homesite inventory funded. Okay. That makes sense. And then I guess just as we think about where the stock trades today and how you’re thinking about equity issuance going forward, I mean, how should we think about that? Is it something where you would consider issuing equity as and when you trade at book value? Is it maybe something more like you could wait and see if the market describes some premium to book value? And then how do you balance those considerations against the risk of running out of deployable debt capacity as you’re starting to push up against this 33% self-imposed debt-to-cap limit, and potentially being stuck if you’re still trading below book value?

Darren Richman: Yes, Julien, it’s Darren. We have ample runway. We — as we said in our prepared remarks, we have about $1.6 billion of firepower, which includes cash and room under the revolver. I think we’ve communicated in the past, and I’ll reiterate it today, is our goal is really to optimize the balance sheet first before we pivot to equity issuances. We’ve had a couple of new equity initiations that are well above book value. And just as an editorial note, we buy into it. We definitely buy into the story beyond book value. And as we had kind of communicated with you and others in the past, the goal isn’t just to get to book value and declare victory. We think that the ultimate returns that investors would expect and demand could result in the stock trading well above book value.

And so to answer your question, it really is about optimizing the balance sheet, using our debt capacity and then seeing where we are as a company and where the stock is to then think about equity issuances.

Operator: Your next question comes from Eric Wolfe with Citigroup.

Eric Wolfe: I know you’ve had very little, if any, credit loss since you launched the business. But is there a way that you internally think about long-term credit loss? So if you’re getting, say, 11% to 12% on option rate, maybe that’s more like 10% to 11% after some assumption around terminations and your ability to recover value from that collateral. I’m just trying to understand internally how you think about sort of the total return profile of the business after credit loss?

Darren Richman: Yes. This is Darren. I mean, I’ll start, and then Rob can jump in. We — in the history of our land banking experience, we haven’t had a homebuilder walkway. We haven’t had a homebuilder look to renegotiate a contract. It’s not to say that it won’t happen or it can happen, but I can only say, looking as using history as a guide, it hasn’t happened yet. And I would argue that it really comes down to our underwriting standards, the use of technology that Adil spoke about, the due diligence screening that we do as part of our overlay is really the glue that holds this all together. And on top of that, we’re also looking for a counterparty that is really a partner, and we’re looking for counterparties that are looking to do business for capital efficiency, not risk mitigation.

And we know that because these are counterparties that are willing to sign up upfront to pooling agreements. Again, even the pooling agreements, investors, homebuilders could walk away from those. So I don’t want to suggests that even with pooling that folks couldn’t walk away, but it really does become a self-selection opportunity for us to know what type of relationship the homebuilder is looking for. I don’t know, Rob, if there’s something you want to add?

Robert Nitkin: Yes. I would just add that to come up with something like that would require ascribing some probability to not just the option termination, but an actual loss in the recovery value of the land that we own, fee simple have underwritten net of the deposit we hold against it, which is obviously as a result of our work, it’s not a scenario we think it’s likely. Again, not to say it won’t happen, but there’s no clear methodology that would make sense to us to use for that.

Eric Wolfe: Got it. And I know it’s only $340,000, so not much, but there’s a small provision for credit loss expense on the income statement, it looks like maybe on development loan receivables. I guess what is that? And sort of how did you estimate that?

Garett Rosenblum: Eric, it’s Garett. That’s a GAAP required adjustment under what’s called CECL or as far as the credit loss pronouncement, which basically requires us to basically estimate potential credit losses. It can’t be zero. We basically estimated it, and that could change as we go forward. But again, this is merely a GAAP required estimate and not an indication of what we actually expect.

Eric Wolfe: Got it. And then for the $770 million that you deployed outside of Lennar, were those all with existing relationships? Or were there some new relationships in there? I think you said 12, and I can’t remember what you said on last quarter’s call, but just curious if there’s some new relationships that were entered into the quarter and if they’re public homebuilders, regional builders, just the profile of the new relationships that’s your forming?

Robert Nitkin: Yes. So last quarter, we mentioned we had 11 distinct counterparties. We added 1 this quarter. So we have 12 distinct counterparties. So we did add that counterparty, but really, a lot of this is — most of that increase you mentioned is driven by just further penetration in the partnerships that we’ve set up. We’ve had a lot of success, just continuing to integrate operationally and continue to do more business with our really high-quality builder counterparties.

Eric Wolfe: Got it. And then just last question for me. There have been a lot of headlines from the government tweets about wanting to sort of improve housing affordability. I guess, are there any policies that you’re hoping for? Do you think it could spur more construction or would be good for your business? Just curious if there are certain things that you’ve seen that have been proposed that you think could help your business?

Darren Richman: So few things. One, we all know affordability is a real challenge. And so the fact that the administration is focused on making housing more available and more affordable certainly makes sense to us. All of the headlines and the articles we’ve read would suggest that more — it relates to more production. More production is obviously good for our business. It creates more certainty around the land that we own and gives us more confidence in the land that we own. Outside of that, I know that there are a lot of kind of conversations that are happening behind the scenes in the industry, and the industry is definitely working to do their part to come up with creative solutions to the challenges.

Operator: Your next question comes from Craig Kucera with Lucid Capital Markets.

Craig Kucera: Can you give us a breakout on how much of the third-party investment in the third quarter was affiliated with Yardly?

Robert Nitkin: Yes. We haven’t disclosed the specific volume by counterparty, but I will say that we have had a lot of success. There is a decent portion of that number, that is the penetration with Yardly, and that has ramped up and been a great successful partnership with the folks over at the Yardly team at Taylor Morrison. So it’s going really well. It has started to close, and we’re feeling really excited about it. But beyond that, we haven’t given any disclosure at this point.

Craig Kucera: Okay. Fair enough. You did have a breakout of the development loan receivables and income this quarter. Were those formally wrapped up in inventory and reported differently? Or are those all sort of originated here in the third quarter?

Garett Rosenblum: Craig, it’s Garett. They were grouped in with inventory at the beginning, and we felt it prudent to break it out going forward as it continues to be a significant part of our business.

Darren Richman: And it’s not a new line of business for us as being a — trying to serve the interest of our builder clients. This is how certain of our clients want to access our land banking capital is through developer partnerships. This has always been part of our strategy and our product offering. It’s just as Garett said, it got to a point where it’s now big enough and scaled enough that the accounts have asked us to break it out separately, but it doesn’t represent a new strategy for us.

Craig Kucera: Got it. And I think in the Q, there’s a reference that that’s actually paid in kind interest. Is that the case here in the third quarter?

Garett Rosenblum: Yes, just to give you a short answer there.

Craig Kucera: Okay. Changing gears. Some of the commentary from Lennar on their third quarter earnings call referenced slowing down some of their volume and taking a pause to adjust to market conditions. Did that translate at all to Lennar executing any of their pause periods with Millrose?

Darren Richman: Not outside of the contractual provisions that they’re allowed to. So if you’re asking about the pause periods where they’re declaring a 6-month pause, absolutely not. But there are always adjustments, regardless of the period related to certain communities. And all of these — anything that was done was done within the contractual allowances for them and for others.

Craig Kucera: Okay. That makes sense. Just a couple more for me. You booked some rating agencies expenses this quarter. Can you give a sense of the time frame of what you might think you might get a rating and what it might mean to your debt cost relative to what you currently have, whether that’s what you issued in the quarter or the spread on your revolver?

Darren Richman: We’re already rated. So just to clear that up. And so we’re rated by Fitch, S&P and Moody’s.

Robert Nitkin: Yes. It’s worth reiterating actually one of the big achievements we’re quite proud of in the quarter is that going from a company without ratings to 3 ratings from those organizations, including an investment-grade rating from one of them, and being able to access the deepest public credit markets to raise $2 billion of bonds at an interest rate that we think that is highly accretive to our business has been a big win for us to strengthen our balance sheet, and that’s part of what’s really opened up the $1.6 billion of liquidity that we have today heading into the fourth quarter that really makes us optimistic about our ability to sort of attack the opportunity in front of us and becomes a really strong competitive advantage versus other players that we can just speak to that publicly available $1.6 billion of liquidity and the strength of our balance sheet.

Craig Kucera: Got it. Just one more for me. A lot of the call, you referenced risk monitoring. I know you closed $770 million of deals this quarter with third parties. But can you talk about the total dollar value of deals you underwrote and may be elected not to move forward with?

Robert Nitkin: Yes. We haven’t disclosed the past portion, but there is certainly a substantial amount of past deals. I mean, part of our risk underwriting is that we’re always, as we said, always evaluating a homebuilder’s assumptions around price and pace and ultimately, the gross margin they project on those communities. And we, in this quarter, just as all in other quarters, turned down a substantial amount of deals because we didn’t think they were set up for success in that — our own unique independent data sources were not necessarily consistent with the builders underwriting. Anything to add, Darren?

Darren Richman: Yes. No, the only other thing I’d add is it’s a good question and it’s a good point in the sense that there are counterparties that we have decided not to do business with because they’ve historically used land banking for risk mitigation. We know that. They know that. And again, it’s — we’d rather pass on those relationships than try to eke out a little bit more spread but taking a lot more risk in times like we’ve experienced in the last year.

Operator: [Operator Instructions] Your next question comes from Aaron Hecht with Citizens Bank.

Aaron Hecht: Just wondering, in terms of the contracts that you currently have in place, how much more capital or how many more partners, clients, can you sign up, given the schedule that they’ve provided and your assumptions underlying the cash inflows and outflows. I’m just trying to get a sense of how many more deals you can do or how the balance of your capital outstanding will trend just based on what’s expected to come in your contracts today?

Robert Nitkin: Yes. I would just say it’s part of our cash flow planning every day that we track our peak capital, including all the development funding against all of our commitments. And so we’re comfortable based on all the liquidity we have today and our capital pipeline that we can serve everything and there does remain additional capacity to bring on new customers.

Darren Richman: Yes, ample. I mean, that’s really the reason why we keep highlighting the $1.6 billion is because almost all of that is really meant for new third-party business. And that’s exactly why we highlighted Adil and the work that he’s done is because given the scale and complexity of the business that we have, and the fact that we do give up about 1/3 of our book value every year, this constant recycling and planning is so important and vital to making sure that our balance sheet is optimized at all times, and we’re not sitting on cash. And we have, on the other side, over committed cash and are not able to fund.

Aaron Hecht: Yes. I guess that’s what I was trying to get at. Is there — the inflows and outflows sound like they could get so complicated that there could be big fluctuations just based on the commitments that you have already. Second question around your data sets and the technology platform that you guys talked about. Is there any way to monetize that without giving up proprietary information for the Millrose shareholder, like data sets that you can provide to the general public on homebuilding or whatnot? Just kind of wondering any way to monetize that?

Unknown Executive: Yes. It’s a great question. It’s not something that we’re focused on right now. We’re really looking to use that data set to drive our operational underwriting efficiencies, and we’re always evaluating kind of strategic partnerships in the homebuilding space where we could create a value chain that really complements our capital solution.

Darren Richman: But it is, look, the data is so important using it in our ecosystem to make real-time judgments. I mean there was a question asked earlier about deals we’ve passed on. Remember, every deal we pass on in addition to the deals we do, we’re capturing all that data real time. And we’re ingesting it and using it to make informed judgments as part of our due diligence. And we have [ Steve Hensley ] here who oversees that analytics, again, making sure that we’re underinvesting in hot areas that are not performing well, and finding ways to put money to work in areas that are performing well and will continue to perform well where there’s a shortage of housing relative to job growth.

Operator: Your next question comes from Julien Blouin with Goldman Sachs.

Julien Blouin: So you’re clearly a really valuable partner to the builders. And I’m just wondering, in terms of the current environment, is one of the ways you’re providing value to them is by sort of providing accommodations or allowing them to sort of pause or slow down their takedowns per the agreement you have with them?

Darren Richman: Look, we haven’t really had to do so outside of what the builders are contractually entitled to. But I’ve said this before, Julien, and you’ve definitely heard me say it, if a builder came to us in the ordinary course and said, “Hey, we were taking down 4 homes per community per month, the contract says we need to take down 3, we’d like to take down 2. And we don’t have additional needs for that capital. It probably means we’re going to slow down development as well. And we’d rather the capital working for as long as we can keep it. And so we’re always thinking through accommodating any client request as long as we don’t have an additional need for that capital. And why would we cause somebody to buy back a homesite at a time when it doesn’t work for them.

All we’re doing is losing book value on which we would earn our option rate. So to answer the question very specifically, we haven’t had to make accommodations outside of what our builder counterparties are entitled to, but we would definitely be open if asked, making sure that we have the capital to do it.

Julien Blouin: Understood. And I guess in terms of what they’re contractually entitled to, what is the sort of the flexibility they have within their current contractual agreements and sort of how much are they exercising that flexibility maybe to currently sort of slow down their pace?

Robert Nitkin: Yes, you can see. The Lennar option agreement is publicly available. So you can see some examples of a finite amount of quarterly takedown extension such that the final takedown cannot be extended. And so that’s an example of that kind of flexibility. And one of the many reasons that builders look at this kind of capital partnership better than debt, which is less flexible for a variety of reasons. But generally speaking, even above that, the benefit is that we’ve individually underwritten every asset. And so we have the ability and our team really can make a judgment call around pace and the right takedowns, particularly in the context of a business that had over $800 million of homesite sale proceeds just in the quarter. So we have such ample liquidity. And by that number, you can see the builders are still taking down their homesites largely on schedule. But that would be one example to answer your question.

Darren Richman: But I just want to go to the point, maybe the heart of it is we really haven’t seen any change in our business. And I think that’s what people are pulsing around like what are we seeing from builders? And we really haven’t seen any change, any real change in their behavior that causes us any concern. We would highlight it, and we just haven’t seen it. It really has been sort of business as usual for us, which has been great. And it’s not like we haven’t seen what’s going on in the backdrop. But you got to remember, we’ve underwritten all these assets. These are mission-critical assets. These are irreplaceable assets, by and large, and we would expect that the builders would continue to take them down almost regardless of what is going on in the backdrop. So I just want to make sure that we’re making the point that it really has been and continues to be business as usual for us.

Operator: At this time, there are no further questions. I’ll now turn the call back over to Darren Richman for closing remarks.

Darren Richman: Thank you. Look, I just want to thank everybody once again for joining us today for following the story. We’re all available should have — should anybody have follow-up questions. Thank you again, and we wish you a great day.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you for joining. You may now disconnect.