Lennar Plans $6B REIT Spin-Off for Asset-Light Strategy

Lennar Corp., the Miami-based homebuilding giant, filed plans to spin off its land holdings into a new publicly traded REIT called Millrose Properties, as reported by Bloomberg.

Bisnow reported that this move is part of Lennar’s ongoing shift to an asset-light operating model, which aims to reduce financial risk while freeing up cash for its core homebuilding operations.

Big-Time Spinoff

Lennar will contribute between $5B and $6B in land assets, along with a homesite option purchase platform and up to $1B in cash, to Millrose. The company plans to distribute around 80% of Millrose’s common stock to Lennar Class A and B shareholders, retaining the remaining 20% for disposition.

Millrose will act as a land bank, acquiring, managing, and selling land back to Lennar and potentially other developers, on a “just-in-time” basis. Unlike traditional land banks, Millrose will rely on recycled capital to fund its acquisitions, mitigating the need for constant fundraising and offering greater resilience during market downturns.

“This spinoff will allow Lennar to access land through off-balance-sheet arrangements, limiting exposure and risks associated with land ownership during uncertain market conditions,” said Drew Reading, a Bloomberg Intelligence analyst.

Goldman-Backed

Kennedy Lewis Investment Management, a firm linked to Goldman Sachs (GS), will oversee Millrose. The REIT is also pursuing a $1B revolving credit facility and additional debt financing to bolster its operations. 

Additionally, Millrose will use $900M of its initial funds to acquire land from Rausch Coleman, a homebuilder Lennar has agreed to acquire.

Market Implications

Lennar’s transition to an asset-light model reflects broader industry efforts to mitigate risks tied to land development amid economic uncertainties. With Millrose managing land assets, Lennar can focus on home construction, creating a leaner operational structure.

Millrose’s recycled capital model is expected to ensure steady liquidity, providing Lennar and other potential customers access to land without exposing them to the volatility of land markets.

Despite the spinoff’s promising potential, Lennar faces immediate headwinds. Rising mortgage rates have challenged its sales figures, with Q4 home orders falling 3% YoY to 16.9K units—below expectations. The company projects 17.5K to 18K new orders in Q1, shy of the 20.1K analysts anticipated.

Lennar’s shares dropped 7% following the announcement, closing at $135.50, adding to its 2.1% YTD decline.

What’s Next?

With the board’s final approval pending, Millrose is set to redefine how Lennar manages its land assets. This REIT’s success could serve as a blueprint for other homebuilders seeking to reduce risk and operate with greater financial agility.

The spinoff aligns with Lennar’s long-stated goal to become a pure-play home manufacturer while retaining a stake in Millrose to benefit from its performance and strategic flexibility.adhering to regulations will be crucial as its role in multifamily operations expands.