You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with our accompanying condensed consolidated financial statements and the notes thereto included in “Part I, Item 1. Financial Statements” in this Form 10-Q and the audited consolidated financial statements and the notes thereto included in the Form 10-K. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-Q, particularly under the section titled “Cautionary Statement Concerning Forward-Looking Statements.” The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. See the sections titled “Part I, Item 1A. Risk Factors” in our Form 10-K and “Cautionary Statement Concerning Forward-Looking Statements” herein for a discussion of the risks, uncertainties, and assumptions associated with these statements. As further described in Note 1. Description of Business to our condensed consolidated financial statements included in “Part I, Item 1. Financial Statements” of this Form 10-Q, we completed the Spin-Off from Lennar on February 7, 2025. The financial information presented herein (i) for the periods prior to the February 7, 2025 Spin-Off is that of the Predecessor Millrose Business and is derived from the consolidated financial statements and accounting records of Lennar, and (ii) for the periods after the February 7, 2025 Spin-Off is that of Millrose and its subsidiaries. Millrose was formed on March 19, 2024 and has operated as an independent company since the Spin-Off on February 7, 2025. Our Business and Recent Transactions Millrose is a corporation incorporated under the laws of the State of Maryland on March 19, 2024. Millrose became an independent, publicly traded company on February 7, 2025 following the Spin-Off from Lennar and its Class A common stock is listed on the NYSE under the symbol “MRP”. We purchase and develop residential land and sell finished homesites to homebuilders by way of option contracts with predetermined costs and takedown schedules. We serve as a solution for homebuilders seeking to expand access to finished homesites while implementing an asset-light strategy. As fully developed homesites are sold by Millrose, capital is recycled into future land acquisitions for homebuilders, providing counterparties with durable access to community growth. Our option contracts provide for the payment of recurring option fees paid by our counterparties through the term of the applicable contract. To a lesser extent, we also provide development loans secured by property intended for single-family use to certain third-party counterparties. We are externally managed and advised by KL pursuant to the management agreement entered into on February 7, 2025 between Millrose and KL (the “Management Agreement”). On March 25, 2026, the Company entered into the Credit Agreement (as defined below) that provides for (i) a four-year Revolving Credit Facility (as defined below) with commitments in an aggregate amount of $1.335 billion, (ii) a DDTL Credit Facility (as defined below) in an aggregate amount of $500 million that may be utilized during the first year following the Effective Date (as defined below), and (iii) an uncommitted accordion feature that allows the Company to seek additional loan commitments under the Credit Agreement in the future, subject to an aggregate maximum commitment amount of $2.5 billion. The net proceeds of the borrowings under the Credit Agreement will be used for general business purposes. Upon the Effective Date, the liens securing the loans under the Company’s prior secured revolving credit facility were released. On April 1, 2026, the Company received a payoff of approximately $284 million related to one of its development loans with an unaffiliated third party. The payment settled all outstanding principal, accrued interest, and fees associated with the loan. As a result, the Company derecognized the outstanding principal and accrued interest balances related to the development loan from its condensed consolidated balance sheets. In addition, the Company reduced its allowance for credit losses to reflect the removal of the loan from its development loan portfolio. Invested Capital Activity as of June 30, 2026 Invested Capital is a non-GAAP financial measure that represents the balance on which monthly cash option fees are paid by counterparties. Invested Capital includes certain components of our condensed consolidated financial statements related to (i) homesites under option contracts, (ii) development loans receivable, and (iii) liabilities. The most directly comparable GAAP financial measure is homesites under option contracts as presented in the Company’s condensed consolidated balance sheets. Management uses Invested Capital as a measure of the capital deployed and believes that the figure is useful to investors because it serves as the basis for generating option fees and other related income. This non-GAAP measure is presented solely 22 to permit investors to understand how our management assesses underlying performance and is not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures. The table below reconciles GAAP reported homesites under option contracts to Invested Capital as of June 30, 2026 and summarizes Invested Capital activity for the three months ended June 30, 2026: Three Months Ended June 30, 2026 (in thousands) Master Program Agreement Other Agreements Total Invested Capital Reconciliation of GAAP to Non-GAAP GAAP reported homesites under option contracts as of June 30, 2026 $ 6,371,716 $ 3,232,019 $ 9,603,735 Add: Development loan receivables (gross) — 49,910 49,910 Remove: Interest receivable on development loans — (617 ) (617 ) Remove: Due from counterparties (1) (34,423 ) (31,697 ) (66,120 ) Remove: Net deferred tax assets and deferred tax liabilities from homesite inventories (56,824 ) — (56,824 ) Remove: Earnest deposits from homesites under option contracts 7,560 — 7,560 Remove: Homesites under option contracts acquired through purchase money mortgages (33,000 ) — (33,000 ) Add: Development holdback liability (100,000 ) — (100,000 ) Add: Builder deposit liabilities (205,664 ) (399,981 ) (605,645 ) Total Invested Capital as of June 30, 2026 $ 5,949,365 $ 2,849,634 $ 8,798,999 Invested Capital Invested Capital as of March 31, 2026 (2) $ 5,973,444 $ 2,732,828 $ 8,706,272 Takedown Proceeds (3) (590,468 ) (437,841 ) (1,028,309 ) Land Acquisition and Development Funding (4) 566,389 554,647 1,121,036 Invested Capital as of June 30, 2026 $ 5,949,365 $ 2,849,634 $ 8,798,999 (in millions) Weighted Average Yield as of June 30, 2026 (5) 8.5 % 10.6 % 9.2 % Implied Quarterly Income Run Rate as of June 30, 2026 (6) $ 128 $ 76 $ 204 Weighted Average Remaining Life as of June 30, 2026 (7) 3.7 years 2.3 years 3.3 years Weighted Average Maturity as of June 30, 2026 (8) 63 months 37 months 55 months (1)Includes option fees received from counterparties in the subsequent month. (2)Includes (a) homesite under option contracts contributed by Lennar at Spin-Off and acquired from Rausch, less option earning deposits and other holdbacks, and (b) takedown, land acquisition and development funding activity through March 31, 2026. (3)Reduction in investment balance for the three months ended June 30, 2026 from (a) homesite takedowns pursuant to option agreements, net of deposit credits adjusted for non-option earning deposits, and (b) repayment of development loans. (4)Includes acquisitions of homesites under option contracts, net of option earnings deposits, and development loan funding for the three months ended June 30, 2026. (5)Based on average option rate and/or loan interest rate weighted by investment balance, assumes SOFR rate as of March 27, 2026. (6)Calculated by multiplying Invested Capital balance at end of period by weighted average yield as of June 30, 2026, adjusted for the number of days in the second quarter 2026. (7)Calculated by taking weighted average life per each community weighted by investment balance. (8)Calculated by taking months until the final scheduled homesite sale per each community weighted by investment balance. During the three months ended June 30, 2026, we funded $566 million for land acquisition and development and received $590 million in net takedown proceeds under the Master Program Agreement at a weighted average yield of 8.5%. We funded $555 million for land acquisition and development and received $438 million in net takedown proceeds for Other Agreements during this period at a weighted average yield of 10.6%. On a total portfolio basis, the weighted average yield was 9.2% as of June 30, 2026. Properties as of June 30, 2026 As of June 30, 2026, our homesite assets consisted of 877 properties (also known as communities) in 30 states across the United States, totaling approximately 143,771 homesites, with an approximate aggregate value of $9.6 billion of homesites under option contracts. Of the homesites owned as of June 30, 2026, we expect the total takedown prices of all homesites to be approximately $16.3 billion, and the total estimated development costs of homesites to be approximately $6.9 billion. As of June 30, 2026, our property assets are collectively located across 30 U.S. states. Approximately 51% of the property assets are concentrated in three states (California, Florida, Texas) and approximately 42% are located in two strong housing market states: Florida and Texas (where we believe the market has healthy underlying demographic and/or economic trends primarily driven by generally steadily growing population). 23 The below table shows the location, number of properties, number of underlying homesites and expected total takedown prices of our properties as of June 30, 2026: State Location Number of Properties (1) Number of Underlying Homesites (2) Total Takedown Prices Alabama 39 4,513 $ 304,257,396 Arizona 36 4,393 530,328,243 Arkansas 38 4,467 319,042,898 California 66 12,787 3,378,308,472 Colorado 24 3,791 586,079,228 Delaware 9 990 169,943,213 Florida (3) 123 20,902 2,004,605,413 Georgia 58 5,693 568,986,276 Idaho 6 356 50,957,641 Illinois 9 784 81,921,925 Indiana 9 933 99,201,695 Kansas 6 819 69,321,186 Maryland 6 4,450 553,502,534 Minnesota 28 1,335 152,177,213 Missouri 3 440 34,303,053 Nevada 12 1,352 238,263,140 New York 1 398 84,032,869 New Jersey 2 295 49,294,782 North Carolina 43 5,453 804,973,610 Oklahoma 56 9,891 657,097,638 Oregon 8 503 57,918,115 Pennsylvania 2 334 52,385,915 South Carolina 33 9,214 957,385,768 Tennessee 31 3,208 455,534,248 Texas 191 39,337 2,987,691,525 Utah 3 1,172 144,007,139 Virginia 16 3,461 512,882,949 Washington 11 1,306 241,219,543 Wisconsin 1 — 1,125,329 West Virginia 7 1,194 113,919,262 Total 877 143,771 $ 16,260,668,220 (1)Communities owned as of June 30, 2026 including communities associated with future purchases; and excluding homesites associated with investments in development loans. (2)Or prospective homesites if fully entitled, as applicable. (3)Excludes properties, homesites, and takedown prices for investments associated with development loans. The below table is a summary of our pools of properties included in our property assets as of June 30, 2026 (dollar amounts are presented in billions): Total Number of Homesites (1) 143,771 Lennar 110,729 Other Agreements 33,042 Invested Capital ($ in billions) (2) 8.8 Lennar 5.9 Other Agreements 2.9 Number of Counterparties 19 Number of Pools 73 Portfolio Pooled % (3) 95 % Quarterly Homesites Delivered 8,867 Number of Terminated Properties — 24 (1)Number of homesites excludes investments associated with development loans. (2)Homesites under option contracts and gross development loans receivables, less deposits, deferred tax liability, interest receivable on development loans, homesites under option contracts acquired through purchase money mortgages, and other holdbacks on post-spin acquired assets. (3)Calculated as total amount of Invested Capital that is within a pool. As of June 30, 2026, we had 143,771 homesites with 19 counterparties, which were included in 73 separate pools, in accordance with the applicable Multiparty Cross Agreements. As of June 30, 2026, 95% of our invested capital balance was pooled under pooling arrangements, of which 100% was pooled under the Master Program Agreement. Components of Results of Operations The following is a summary of the key components of our operations for the three and six months ended June 30, 2026: Revenues Our primary source of revenue is income generated from holding land under option contracts. The Company accounts for these contracts under ASC 842 Leases because the Company transfers elements of control of the homesites to the counterparties during the option contract period. The Company owns title to and holds land during the development period and grants our counterparties under these contracts exclusive options to purchase land at predetermined prices and takedown schedules. In return the Company earns income on our homesites under option contracts through recurring option fees paid by our counterparties through the term of the applicable option contract. We also derive development loan income from interest earned on the outstanding loan balance of development loans secured by residential property. Costs Operating Expenses: Our operating expenses after the Spin-Off include Management Fees (as defined below) paid to KL for management and advisory services. The management fee is calculated as 1.25% of Tangible Assets (as defined in the Management Agreement) (the “Management Fee”). All personnel are employed by the Manager or an affiliate of the Manager, and their salaries are paid by the Manager or its affiliate, as applicable; therefore, we do not record personnel-related expenses, including salaries, benefits, and share-based compensation for any employees. All cash compensation paid to our Board of Directors (the “Board”) and certain general and administrative expenses are covered by the Management Fee. The Management Fee does not cover offering expenses, costs incurred for services in connection with extraordinary litigation and mergers and acquisitions and other events outside of Millrose’s ordinary course of business, and, in some circumstances, costs associated with the ownership and maintenance of land. Any such expenses that are not covered by the Management Fee are paid for by Millrose and are recorded as general and administrative expenses or other expenses, as appropriate under GAAP. Certain of our option agreements provide (and new option agreements in the future may provide) for reimbursement by the counterparties of our transaction and/or asset management expenses, including third-party legal, diligence and servicing costs, and may include certain amounts paid by such counterparties directly to affiliates of the Manager in connection with related services provided to by such affiliates to the applicable counterparties. Our operating expenses include stock-based compensation for restricted stock units (“RSUs”) granted to each member of the Board through the quarter ended June 30, 2026. The Company records the RSU award costs on a straight-line basis over the RSU vesting period as stock-based compensation in operating expenses. The Company also records a provision for (benefit from) credit losses in accordance with ASC 326 Financial Instruments – Credit Losses. For the three and six months ended June 30, 2025, our operating expenses included an allocation of salaries, general, and administrative expenses for the Predecessor Millrose Business prior to the Spin-Off for the period of January 1, 2025 through February 7, 2025. These expenses have been allocated from Lennar based on a reasonable proportional cost allocation method primarily based directly on headcount, usage, or other allocation methods depending on the nature of the services. The allocation was calculated as (i) the average daily expense allocated and recorded for the twelve months ended December 31, 2024, applied to (ii) days in the first quarter 2025 prior to the Spin-Off. Sales, general, and administrative expenses from pre-spin period were $25.0 million for the period of January 1, 2025 through February 7, 2025. Other Income (Expense): We record interest income earned on our cash balances held with financial institutions as other income as it is not part of the primary activities of the business. Other expenses also include (i) interest expense related to our debt obligations, and (ii) other expenses which may include rating agency fees, legal fees, audit fees, and bank fees. Results of Operations The following discussion describes the results of operations for the three and six months ended June 30, 2026 versus the three and six months ended June 30, 2025. The financial data for the six months ended June 30, 2025 includes the combined 25 results of operations for the Predecessor Millrose Business prior to the Spin-Off. We have a single operating and reportable segment in accordance with GAAP and our operations are conducted in the United States. Three months ended Six months ended June 30, June 30, (in thousands) 2026 2025 2026 2025 Revenues: Option fee revenues $ 195,400 $ 141,084 $ 380,700 $ 221,165 Development loan income 1,453 7,918 11,081 10,535 Total revenues 196,853 149,002 391,781 231,700 Operating expenses: Management Fee expense 29,909 21,960 58,061 34,064 Stock-based compensation expense 217 181 909 181 Provision for (benefit from) credit loss expense (907 ) — (907 ) — Sales, general, and administrative expenses from pre-spin periods — — — 24,960 Total operating expenses 29,219 22,141 58,063 59,205 Income from operations 167,634 126,861 333,718 172,495 Other income (expense): Interest income 1,108 1,818 2,236 2,906 Interest expense (40,014 ) (10,285 ) (79,226 ) (12,821 ) Other expenses (391 ) (866 ) (471 ) (866 ) Total other income (expense) (39,297 ) (9,333 ) (77,461 ) (10,781 ) Net income before income taxes 128,337 117,528 256,257 161,714 Income tax expense 2,456 4,768 7,492 9,148 Net income $ 125,881 $ 112,760 $ 248,765 $ 152,566 Adjustment for expenses from pre-spin periods — — — 24,960 Net income attributable to Millrose Properties, Inc. common stockholders $ 125,881 $ 112,760 $ 248,765 $ 177,526 Three Months Ended June 30, 2026 Versus Three Months Ended June 30, 2025 Overview of Net Income Our net income was $125.9 million for the three months ended June 30, 2026, compared to $112.8 million for the three months ended June 30, 2025. The increase in net income was primarily driven by (i) higher option fee revenues in the current-year period, (ii) a reduction to the allowance for credit losses related to the payoff of a development loan with an unaffiliated third party, and (iii) lower income tax expense. These increases were partially offset by (i) lower development income related to the payoff of the development loan, (ii) higher Management Fee expense, and (iii) higher interest expenses related to the Company’s debt obligations. Option Fee Revenues Option fees revenues were $195.4 million for three months ended June 30, 2026, compared to $141.1 million for the three months ended June 30, 2025, reflecting continued growth in our business as a result of geographic expansion and counterparty diversification. Development Loan Income Development loan income for the three months ended June 30, 2026 was $1.5 million, compared to $7.9 million for the three months ended June 30, 2025. The decrease in development loan income is due to the $284 million payoff of a development loan with an unaffiliated party on April 1, 2026, which resulted in lower interest income earned under the development loan agreement during the current-year period. Management Fee Expense Management Fee expense for the three months ended June 30, 2026 was $29.9 million, compared to $22.0 million for the three months ended June 30, 2025. Management Fee expense was higher due to higher Tangible Assets as a result of higher homesites under option contracts in the current-year period versus the prior-year period. 26 Stock-based Compensation Expense Stock-based compensation expense related to RSUs granted to the Board was $0.2 million for the three months ended June 30, 2026, compared to $0.2 million for the three months ended June 30, 2025. Other Income (Expense) Other income (expense) was a net expense of $39.3 million for the three months ended June 30, 2026, compared to a net expense of $9.3 million for the three months ended June 30, 2025. Other income (expense) for the three months ended June 30, 2026 includes (i) interest expense for the Credit Agreement and Senior Notes (as defined below) of $40.0 million, and (ii) other expenses of $0.4 million, which was partially offset by interest income of $1.1 million earned on cash balances held in the Company’s operating bank accounts. Other income (expense) for the three months ended June 30, 2025 consisted of (i) interest expense of $10.3 million for the Company’s debt obligations, and (ii) other expenses of $0.8 million, which was partially offset by interest income of $1.8 million related to cash balances. Income Tax Expense The provision for income taxes for the three months ended June 30, 2026 was $2.5 million, compared to $4.8 million for the three months ended June 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the three months ended June 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9%, compared to 24.8% for the three months ended June 30, 2025. See Note 10. Income Taxes in the condensed consolidated financial statements for more information. Six Months Ended June 30, 2026 Versus Six Months Ended June 30, 2025 Overview of Net Income Our net income was $248.8 million for the six months ended June 30, 2026, compared to $152.5 million for the six months ended June 30, 2025. Net income for the six months ended June 30, 2025 included post Spin-Off income of $177.5 million, partially offset by pre-spin net loss of $25.0 million related to sales, general, and administrative expenses attributable to the Predecessor Millrose Business. The increase in net income was primarily driven by (i) higher revenues in the current-year period, (ii) a reduction in the allowance for credit losses related to the payoff of a development loan with an unaffiliated third party, and (iii) lower income tax expense. These increases in net income were partially offset by (i) higher interest expense related to the Company’s debt obligations, and (ii) higher stock-based compensation expense for RSUs granted to the Board members. Option Fee Revenues Option fees revenues were $380.7 million for six months ended June 30, 2026, compared to $221.2 million for the six months ended June 30, 2025, reflecting (i) a full two quarters of post Spin-Off operations compared to a partial post Spin-Off period in the prior-year period, and (ii) continued growth in our business as a result of geographic expansion and counterparty diversification. In the prior-year period prior to the Spin-Off, the Predecessor Millrose Business did not generate option fee revenues because its inventories were not subject to purchase option contracts with homebuilders. The principal operating activities related to finished homesites were conducted by the Predecessor Millrose Business’s parent company, who sold those homesites to Lennar counterparties. Development Loan Income Development loan income for the six months ended June 30, 2026 was $11.1 million, compared to $10.5 million for the six months ended June 30, 2025. The increase in development loan income is due to (i) an increase in development loan agreements, and (ii) a full quarter of operations compared to partial quarter operations post Spin-Off in the prior year period. In the prior-year period prior to the Spin-Off, the Predecessor Millrose Business did not generate development loan income because it did not engage in principal operating activities related to development loans. The remaining increase in development loan income in the current-year period is due to higher development loan balances versus the prior-year period. Management Fee Expense Management Fee expense for the six months ended June 30, 2026 was $58.1 million, compared to $34.1 million for the six months ended June 30, 2025. Management Fee expense was higher due to (i) a full quarter of the Management Agreement being in effect in the current-year period compared to only the period following the Spin-Off in the prior-year period, and (ii) 27 higher Tangible Assets as a result of higher homesites under option contracts in the current-year period versus the prior-year period. Stock-based Compensation Expense Stock-based compensation expense related to RSUs granted to the Board members was $0.9 million for the six months ended June 30, 2026, compared to $0.2 million for the six months ended June 30, 2025. The increase was primarily attributable to stock-based compensation recognized in connection with additional RSUs granted on December 10, 2025 and May 13, 2026, compared to the prior-year period, which included RSUs granted on April 3, 2025. Sales, general, and administrative expenses for the Predecessor Millrose Business included $8.9 million of stock-based compensation expense for the six months ended June 30, 2025. Stock-based compensation expense was allocated to the Predecessor Millrose Business on a specific identification basis or using a proportional cost allocation method, as applicable, as disclosed in the Form 10-K. Sales, General and Administrative Expenses from Pre-Spin Periods Sales, general and administrative expenses from pre-spin periods were $25.0 million for the six months ended June 30, 2025. For the six months ended June 30, 2025, the expenses were allocated by Lennar for the period from January 1, 2025 to the Spin-Off. There were no sales, general and administrative expenses recorded after the Spin-Off. Other Income (Expense) Other income (expense) was a net expense of $77.5 million for the six months ended June 30, 2026, compared to a net expense of $10.7 million for the six months ended June 30, 2025. Other income (expense) for the six months ended June 30, 2026 includes (i) interest expense for the Credit Agreement (including interest incurred under the Company’s prior revolving credit facility before March 25, 2026) and Senior Notes of $79.2 million, and (ii) other expenses of $0.5 million, which was partially offset by interest income of $2.2 million earned on cash balances held in the Company’s operating bank accounts. Other income (expense) for the six months ended June 30, 2025 consisted of interest expense of $12.8 million for the Company’s debt obligations and, other expenses of $0.8 million, partially offset by interest income of $2.9 million related to cash balances. Income Tax Expense The provision for income taxes for the six months ended June 30, 2026 was $7.5 million, compared to $9.1 million for the six months ended June 30, 2025. Income tax expense decreased compared to the prior-year period primarily due to changes in the allocation of taxable income among our TRSs resulting from updated market-based assumptions of certain intercompany financing arrangements. The tax provision for the six months ended June 30, 2026, as determined and calculated from the activities in our TRSs, resulted in an overall effective tax rate of 24.9%, compared to 24.8% for the six months ended June 30, 2025. See Note 10. Income Taxes in the condensed consolidated financial statements for more information. Adjusted Funds from Operations Our reported results are presented in accordance with GAAP. We also disclose Adjusted Funds from Operations (“AFFO”), which is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that AFFO is useful to investors because it is a widely accepted industry measure used by analysts and investors to compare the operating performance of REITs. We calculate AFFO by starting with Nareit’s definition of funds from operations (“FFO”), which is the net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation, as applicable. During this period, there were no applicable adjustments to net income of the Company to calculate FFO. We then calculate AFFO by adjusting net income to eliminate the impact of non-recurring items that are not reflective of operations and certain non-cash items that reduce or increase net income (loss) in accordance with GAAP, and also adjusted for income tax expense (other than income tax expenses of our TRS) that will not be incurred following our election and qualifications to be subject to tax as a REIT for U.S. federal income tax purposes. As shown in the tables below, certain non-recurring and non-cash transactions added back for the three and six months ended June 30, 2026 and 2025 include non-cash components of compensation expense, amortization of financing and issuance costs for our Credit Agreement (including issuance costs incurred under the Company’s prior revolving credit facility before March 25, 2026) and Senior Notes, provision for (benefit from) credit loss expense, and non-recurring rating agency expenses related to the Spin-Off. Other REITs may not define AFFO in the same manner as we do and therefore our calculation of AFFO may not be comparable to such other REITs. You should also not consider AFFO to be an alternative to net income or as a reliable measure of our operating performance. 28 The table below is a reconciliation of GAAP net income to AFFO and GAAP earnings per share to AFFO earnings per share for the three months ended June 30, 2026 and 2025: Three Months Ended (in thousands, except share amounts) June 30, 2026 June 30, 2025 Net income attributable to Millrose Properties, Inc. common stockholders $ 125,881 $ 112,760 Adjustments: Add: Amortization of deferred financing and issuance costs (1) 2,368 1,520 Add: Stock-based compensation expense (2) 217 181 Add: Provision for (benefit from) credit loss expense (3) (907 ) — Add: Rating agency expenses (4) — 567 Total adjustments 1,678 2,268 AFFO attributable to Millrose Properties, Inc. common stockholders $ 127,559 $ 115,028 AFFO basic earnings per share of Class A and Class B common stock $ 0.77 $ 0.69 AFFO diluted earnings per share of Class A and Class B common stock $ 0.77 $ 0.69 Reconciliation of GAAP earnings per share to AFFO per share GAAP reported basic and diluted earnings per share of Class A and Class B common stock $ 0.76 $ 0.68 Adjustments: Add: Amortization of deferred financing and issuance costs (1) 0.01 0.01 Add: Stock-based compensation (2) 0.01 0.00 Add: Provision for (benefit from) credit loss expense (3) (0.01 ) — Add: Rating agency expenses (4) — 0.00 AFFO basic and diluted earnings per share of Class A and Class B common stock $ 0.77 $ 0.69 Basic weighted average common shares outstanding of Class A and Class B common stock 166,046,951 166,003,497 Diluted weighted average common shares outstanding of Class A and Class B common stock 166,060,914 166,031,175 (1)Reflected in interest expense in the consolidated statements of operations. See Note 8. Debt Obligations in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (2)RSUs granted to each member of the Board under the Millrose Properties, Inc. 2024 Omnibus Incentive Plan. See Note 12. Stock-Based Compensation Expense in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (3)Provision for (benefit from) credit losses for development loan receivables. See Note 2. Basis of Presentation and Significant Accounting Policies, Development Loan Receivables, net in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (4)Reflected in other expenses in the consolidated statements of operations. See Note 2. Basis of Presentation and Significant Accounting Policies, Other Income (Expense) net in the condensed consolidated financial statements included elsewhere in this Form 10-Q. 29 The table below is a reconciliation of GAAP net income to AFFO and GAAP earnings per share to AFFO earnings per share for the six months ended June 30, 2026 and 2025: Six Months Ended (in thousands, except share amounts) June 30, 2026 June 30, 2025 Net income attributable to Millrose Properties, Inc. common stockholders $ 248,765 $ 177,526 Adjustments: Add: Amortization of deferred financing and issuance costs (1) 4,709 1,520 Add: Stock-based compensation expense (2) 909 181 Add: Provision for (benefit from) credit loss expense (3) (907 ) — Add: Rating agency expenses (4) — 567 Total adjustments 4,711 2,268 AFFO attributable to Millrose Properties, Inc. common stockholders $ 253,476 $ 179,794 AFFO basic earnings per share of Class A and Class B common stock $ 1.53 $ 1.08 AFFO diluted earnings per share of Class A and Class B common stock $ 1.53 $ 1.08 Reconciliation of GAAP earnings per share to AFFO per share GAAP reported basic and diluted earnings per share of Class A and Class B common stock $ 1.50 $ 1.07 Adjustments: Add: Amortization of deferred financing and issuance costs (1) 0.03 0.01 Add: Stock-based compensation (2) 0.01 0.00 Add: Provision for (benefit from) credit loss expense (3) (0.01 ) — Add: Rating agency expenses (4) — 0.00 AFFO basic and diluted earnings per share of Class A and Class B common stock $ 1.53 $ 1.08 Basic weighted average common shares outstanding of Class A and Class B common stock 166,025,344 166,003,497 Diluted weighted average common shares outstanding of Class A and Class B common stock 166,049,937 166,020,988 (1)Reflected in interest expense in the consolidated statements of operations. See Note 8. Debt Obligations in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (2)RSUs granted to each member of the Board under the Millrose Properties, Inc. 2024 Omnibus Incentive Plan. See Note 12. Stock-Based Compensation Expense in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (3)Provision for (benefit from) credit losses for development loan receivables. See Note 2. Basis of Presentation and Significant Accounting Policies, Development Loan Receivables, net in the condensed consolidated financial statements included elsewhere in this Form 10-Q. (4)Reflected in other expenses in the condensed consolidated statements of operations. See Note 2. Basis of Presentation and Significant Accounting Policies, Other Income (Expense) in the condensed consolidated financial statements included elsewhere in this Form 10-Q. 30 Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to fund investments and operations, make distributions to our stockholders and meet other general business needs. As of June 30, 2026, we had $34.2 million cash on hand and approximately $850 million capacity under our Revolving Credit Facility and $500 million capacity under our DDTL Credit Facility. Our primary sources of liquidity are cash flows from operations and debt financing under our Revolving Credit Facility of $1.335 billion, our DDTL Credit Facility of $500 million, and our Senior Notes of $2.0 billion. We believe that our existing cash on hand, cash generated from operations and available capacity under the Revolving Credit Facility and DDTL Credit Facility will be sufficient to meet our liquidity needs in the short and long term. In the future, we may seek to further raise capital or engage in other forms of borrowings in order to fund future investments or to refinance existing indebtedness. Our ability to satisfy our liquidity requirements depends on our future operating performance, which is affected by prevailing economic conditions, market conditions in the real estate industry and other factors, many of which are beyond our control. Cash Flows Our cash flows for the six months ended June 30, 2026 and 2025 were as follows: Six months ended June 30, (in thousands) 2026 2025 Cash flows from (used in) Operating activities $ 1,683,313 $ 1,610,015 Investing activities (1,796,857 ) (2,812,628 ) Financing activities 112,669 1,269,188 Net (decrease) increase in cash $ (875 ) $ 66,575 Cash Flows from Operating Activities Net cash from operating activities was $1.683 billion for the six months ended June 30, 2026. Cash inflows included cash generated from takedowns of homesites under option contracts net of deposit credits, option fees from homesites under option contracts, interest paid-in-kind under our development loan agreements, and interest earned on cash held in our bank accounts for operating purposes. Cash outflows consisted of payments of the Management Fee, interest on debt obligations, and other operating expenses. Net cash from operating activities was $1.610 billion for the six months ended June 30, 2025. Cash inflows included cash generated from takedowns of homesites under option contracts net of deposit credits, option fees from homesites under option contracts, interest paid-in-kind under our development loan agreements, and interest earned on cash held in our bank accounts for operating purposes. Cash flows from operating activities also included the Predecessor Millrose Business pre-Spin-Off net loss of $25.0 million. Cash outflows consisted of payments of the Management Fee and interest on debt obligations. The increase in cash from operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily driven by (i) higher cash generated from option fees as a result of growth in homesites under option contracts, and (ii) higher interest paid-in kind under our development loan agreements. These increases were partially offset by (i) higher interest payments on debt obligations, and (ii) higher Management Fee payments due to higher Tangible Assets resulting from an increase in homesites under option contracts. Cash Flows from Investing Activities Net cash used in investing activities was $1.797 billion for the six months ended June 30, 2026. Investing cash outflows consisted of cash used to acquire homesites for our homesite option platform net of option deposits, and loans made to counterparties under our development loan agreements. These investing cash outflows were partially offset by principal payments received from counterparties under our development loan agreements. Net cash used in investing activities was $2.813 billion for the six months ended June 30, 2025. Investing cash outflows consisted of cash paid to acquire the Rausch homesites, cash used to acquire homesites net of option deposits, and loans made to counterparties under our development loan agreements. These investing cash outflows were partially offset by option deposit payments received related to the inventory contributed by Lennar at the Spin-Off and principal payments received from counterparties under our development loan agreements. The lower cash used in investing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily driven by the Rausch Transaction in the prior-year period, lower development loans funded to counterparties, lower investments in homesites under option contracts, and higher principal payments received from 31 counterparties under our development loan agreements, including the $284 million payoff of a development loan on April 1, 2026. These decreases were partially offset by option deposit payments received related to inventory contributed by Lennar in connection with the Spin-Off during the prior-year period. Cash Flows from Financing Activities Net cash from financing activities was $112.7 million for the six months ended June 30, 2026. Financing cash inflows consisted of proceeds received under the Revolving Credit Facility (including proceeds under the Company’s prior revolving credit facility before March 25, 2026). These financing cash inflows were partially offset by financing costs related to our DDTL Credit Facility, principal repayments of the Revolving Credit Facility, dividends paid to our stockholders, and dividend equivalent rights paid to our stockholders. Net cash from financing activities was $1.269 billion for the six months ended June 30, 2025. Financing cash inflows consisted of cash contributed by Lennar at the Spin-Off and proceeds received from our debt obligations related to the Revolving Credit Facility. These financing cash inflows were partially offset by deal costs related to the Spin-Off, financing costs related to the Company’s debt obligations, principal repayments of the Company’s debt obligations, dividends paid to our stockholders, and payments on a seller note related to a community acquired from Lennar. The decrease in net cash from financing activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by (i) lower proceeds from the Company’s debt borrowings as compared to the prior-year period, (ii) higher dividends paid to stockholders, and (iii) the prior-year period cash contribution from Lennar. These cash flow decreases were partially offset primarily by (i) lower repayments of the Company’s debt obligations as compared to the prior-year period, (ii) prior-year period deal costs related to the Spin-Off, and (iii) prior-year period payment of the seller note. Revolving Credit Facility and Delayed Draw Term Loan Facility On March 25, 2026 (the “Effective Date”), the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders, which amended and restated the Company’s prior secured revolving credit agreement entered into on February 7, 2025. The Credit Agreement provides for (i) a four-year revolving credit facility (the “Revolving Credit Facility”) with commitments in an aggregate amount of $1.335 billion, (ii) a delayed draw term loan facility (the “DDTL Credit Facility”) in an aggregate amount of $500 million that may be utilized during the first year following the Effective Date, and (iii) an uncommitted accordion feature that allows the Company to seek additional loan commitments under the Credit Agreement in the future, subject to an aggregate maximum commitment amount of $2.5 billion. Borrowings under the Credit Agreement are subject to compliance with a borrowing base, which is a function of the values from time to time of the properties of the Company and its subsidiaries. The revolving loans and any delayed draw term loans borrowed under the Credit Agreement will mature on March 25, 2030. The net proceeds of the borrowings under the Credit Agreement will be used for general business purposes. The Credit Agreement is unsecured. Upon the Effective Date, the liens securing the loans under the Company’s prior secured revolving credit facility were released. Loans under the Credit Agreement bear interest at the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus an applicable margin at the per annum rate of (i) 2.00%, if the Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 0.30 to 1.00, (ii) 2.25% if the Leverage Ratio is greater than 0.30 to 1.00 and less than or equal to 0.40 to 1.00, and (iii) 2.50% if the Leverage Ratio is greater than 0.40 to 1.00. At the Company’s option, loans may instead bear interest at the Alternate Base Rate (as defined in the Credit Agreement) plus an applicable margin at the per annum rate of 1.00% lower than the applicable margin for Adjusted Term SOFR Rate loans set forth above, in each case, based upon the Leverage Ratio. As of the Effective Date, the Company’s obligations under the Credit Agreement are guaranteed by SPE LLC and MPSAB, LLC (“MPSAB”), each a directly or indirectly wholly-owned subsidiary of the Company. In certain circumstances, the Credit Agreement requires the Company to cause certain future subsidiaries of the Company that are not Taxable REIT Subsidiaries or SPEs (each as defined in the Credit Agreement) to become guarantors. The Credit Agreement includes affirmative and negative covenants applicable to the Company and its subsidiaries, including, without limitation, covenants regarding indebtedness, liens, dividends and other restricted payments, investments, asset sales, transactions with affiliates, negative pledges, mergers and other fundamental changes, permitted lines of business, financial contracts and designation of unrestricted subsidiaries. The Credit Agreement contains financial covenants, tested quarterly, consisting of a maximum Leverage Ratio, a minimum interest coverage ratio and a minimum tangible net worth. The Credit Agreement also requires the Company to maintain its status as a REIT. The loans under the Credit Agreement may be accelerated if an event of default occurs. Events of default include (i) customary events of default and (ii) KL ceasing to be the Company’s manager and the Company failing to appoint a replacement manager reasonably acceptable to the required lenders within 90 days. 32 August 2025 Offering of Senior Notes On August 7, 2025, the Company issued $1.25 billion aggregate principal amount of its 6.375% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes were issued at par value. The Company received net proceeds of approximately $1.23 billion, after deducting the initial purchasers’ discounts and commissions and offering expenses. The 2030 Notes were issued pursuant to the 2030 Notes Indenture, among the Company, the subsidiary guarantors from time to time party thereto and Citibank, N.A., as trustee. The 2030 Notes are fully and unconditionally guaranteed on a senior unsecured basis by SPE LLC and MPSAB. The 2030 Notes and the guarantee are the Company’s and the guarantors’ general senior unsecured obligations and are (i) pari passu in right of payment with all of the Company’s and the guarantors’ existing and future senior indebtedness, including the indebtedness under the Revolving Credit Agreement and the 2032 Notes (as defined below), (ii) senior in right of payment to any future subordinated indebtedness of the Company and the guarantors, (iii) effectively subordinated to all of the Company’s and the guarantors’ existing and future secured indebtedness, including the indebtedness under the Revolving Credit Agreement, to the extent of the value of the assets securing such indebtedness, and (iv) structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries that do not guarantee the 2030 Notes. The 2030 Notes mature on August 1, 2030, and interest is payable semi-annually on February 15 and August 15 of each year, beginning on February 15, 2026. The Company has the option to redeem some or all of the 2030 Notes on or after August 1, 2027 at the redemption prices specified in the 2030 Notes Indenture. Prior to August 1, 2027, the Company may redeem some or all of the 2030 Notes at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest on the 2030 Notes being redeemed plus a “make-whole” premium. In addition, prior to August 1, 2027, the Company may redeem up to 40% of the 2030 Notes with cash in an amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 106.375% of the principal amount being redeemed plus accrued and unpaid interest on the 2030 Notes being redeemed. The 2030 Notes Indenture includes certain restrictive covenants that limit the Company’s and certain of its subsidiaries’ ability to, among other things: (i) create certain liens, (ii) engage in certain sale and leaseback transactions, and (iii) effect certain mergers or consolidations, or sell all or substantially all of its assets. These covenants are subject to a number of important qualifications and exceptions as set forth in the 2030 Notes Indenture. Additionally, upon the occurrence of a Change of Control Triggering Event (as defined in the 2030 Notes Indenture), the Company must offer to repurchase all of the 2030 Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The 2030 Notes Indenture also provides for customary events of default. As of June 30, 2026, the aggregate principal amount outstanding under the 2030 Notes was $1.25 billion. The Company was in compliance with all covenants under the 2030 Notes Indenture and there were no events of default. There were no material changes to the 2030 Notes during the three months ended June 30, 2026. See Note 8. Debt Obligations to our condensed consolidated financial statements included in “Part I, Item 1 Financial Statements” of this Form 10-Q for further description September 2025 Offering of Senior Notes On September 11, 2025, the Company issued $750 million aggregate principal amount of its 6.250% Senior Notes due 2032 (the “2032 Notes”, together with the 2030 Notes, the “Senior Notes”). The 2032 Notes were issued at par value. The Company received net proceeds of approximately $737.5 million, after deducting the initial purchasers’ discounts and commissions and offering expenses. The 2032 Notes were issued pursuant to the 2032 Notes Indenture, among the Company, the subsidiary guarantors from time to time party thereto and Citibank, N.A., as trustee. The 2032 Notes are fully and unconditionally guaranteed on a senior unsecured basis by SPE LLC and MPSAB. The 2032 Notes and the guarantee are the Company’s and the guarantors’ general senior unsecured obligations and are (i) pari passu in right of payment with all of the Company’s and the guarantors’ existing and future senior indebtedness, including the indebtedness under the Revolving Credit Agreement and the 2030 Notes, (ii) senior in right of payment to any future subordinated indebtedness of the Company and the guarantors, (iii) effectively subordinated to all of the Company’s and the guarantors’ existing and future secured indebtedness, including the indebtedness under the Revolving Credit Agreement, to the extent of the value of the assets securing such indebtedness, and (iv) structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries that do not guarantee the 2032 Notes. 33 The 2032 Notes mature on September 15, 2032, and interest is payable semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026. The Company has the option to redeem some or all of the 2032 Notes on or after September 15, 2028 at the redemption prices specified in the 2032 Notes Indenture. Prior to September 15, 2028, the Company may redeem some or all of the 2032 Notes at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest on the notes being redeemed plus a “make-whole” premium. In addition, prior to September 15, 2028, the Company may redeem up to 40% of the 2032 Notes with cash in an amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 106.250% of the principal amount being redeemed plus accrued and unpaid interest on the 2032 Notes being redeemed. The 2032 Notes Indenture includes certain restrictive covenants that limit the Company’s and certain of its subsidiaries’ ability to, among other things: (i) create certain liens (ii) engage in certain sale and leaseback transactions, and (iii) effect certain mergers or consolidations, or sell all or substantially all of its assets. These covenants are subject to a number of important qualifications and exceptions as set forth in the 2032 Notes Indenture. Additionally, upon the occurrence of a Change of Control Triggering Event (as defined in the 2032 Notes Indenture), the Company must offer to repurchase all of the 2032 Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The 2032 Notes Indenture also provides for customary events of default. As of June 30, 2026, the aggregate principal amount outstanding under the 2032 Notes was $750 million. The Company was in compliance with all covenants under the 2032 Notes Indenture and there were no events of default. There were no material changes to the 2032 Notes during the three months ended June 30, 2026. See Note 8. Debt Obligations to our condensed consolidated financial statements included in “Part I, Item 1 Financial Statements” of this Form 10-Q for further description. Purchase Money Mortgages During 2025, the Company acquired two land parcels totaling $33 million which were financed through property-level, purchase-money arrangements which are fully indemnified by a counterparty. Both obligations are non-recourse to the Company and are secured solely by the respective underlying properties. The counterparty is responsible for all debt service related to the interest on the purchase money mortgages until their maturity dates in March 2026 and December 2027, respectively, at which time the Company intends to enter into an option agreement on these properties with the counterparty. Principal payments of $29 million are due in 2026, and $4 million are due in 2027. See Note 8. Debt Obligations to our condensed consolidated financial statements included in this Form 10-Q for further description. Debt to Equity Ratio Limit Right In addition to the Credit Agreement and Senior Notes, Millrose may seek to pursue other debt and expects to have access to a certain amount of debt and equity capital at least a portion of which is intended to be available for use in financing transactions with new counterparties. Millrose may also seek additional third-party financing to satisfy any additional capital needs or raise capital through equity and debt issuances into the market. Additionally, any third-party financing arrangements Millrose enters into may not cause its debt to equity ratio to exceed 1:1 (the “Debt to Equity Ratio Limit”) unless Millrose obtains the prior approval of Lennar. Secured Financing Collateral Consent Right From time to time, Millrose may enter into various “secured financing arrangements,” which may include but are not limited to secured or collateralized loans, or any other transactions where assets may be pledged or used as collateral to secure the financing instrument, whether or not the security interest is perfected. In such cases, Millrose may use the land assets it holds through its subsidiaries in its real estate portfolio or the proceeds from counterparties’ exercises of purchase options relating to the land assets in Millrose’s real estate portfolio as collateral to secure the financing. While Millrose may, at its discretion, enter into any secured financing arrangements it so chooses (subject to the Debt to Equity Ratio Limit), Millrose is prohibited from granting or selling any security interest whereby the assets pledged pursuant to such security interest include both assets acquired from Lennar and homesites of Other Counterparties (i.e., mixing the assets into one collateral pool) without Lennar’s prior written consent. Dividends On January 15, 2026, the Company paid a dividend of $0.75 to holders of our Class A common stock and our Class B common stock as of the close of business on January 5, 2026, as declared by the Board on December 22, 2025. On April 15, 2026, the Company paid a dividend of $0.76 to holders of our Class A common stock and our Class B common stock as of the 34 close of business on April 3, 2026, as declared by the Board on March 23, 2026. On June 23, 2026, the Company declared a dividend of $0.77 to Class A common stockholders and Class B common stockholders of record as of the close of business July 6, 2026. This dividend was paid on July 15, 2026. We intend to make regular dividend payments of at least 90% of our REIT taxable income to holders of our common stock out of assets legally available for this purpose. While we do not plan to do so, under currently applicable Internal Revenue Service guidance, approximately 80% of these dividends may be paid in the form of stock dividends, rather than in cash. Dividends will be authorized by our Board and declared by us based on a number of factors including actual results of operations, dividend restrictions under Maryland law or applicable debt covenants, our liquidity and financial condition, our taxable income, the annual distribution requirements under the REIT Requirements, our operating expenses and any other factors our Board deems relevant. Subject to certain exceptions, distributions received from us will not be qualified dividends and will therefore be taxed at ordinary income rates to the extent of our current or accumulated earnings and profits. Effects of Inflation and Seasonality See discussion in the section “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K. Promissory Notes MPH Parent and other TRSs have issued to Millrose promissory notes that are secured by a pledge of all equity interests in the Property LLCs and unrecorded mortgages on certain of our real property assets (the “Promissory Notes”). In the event that MPH Parent or another TRS of Millrose acquires additional land assets, the Promissory Notes may be further amended to reflect such acquisitions. Alternatively, MPH Parent or another TRS of Millrose may issue one or more additional promissory notes that are similar to the Promissory Notes. Mortgages In connection with the Promissory Notes, each of the Property LLCs delivered fully executed mortgages (the “Mortgages”) with respect to the homesites that they own in favor of Millrose to secure the Promissory Notes. The Mortgages were not recorded initially, but each Property LLC is required to comply with Millrose’s request to amend the Mortgages so that they may be recorded if Millrose so requests. The homesites covered by the Mortgages will automatically be released from the applicable Mortgage upon (a) payment in full of the applicable Promissory Note or (b) the occurrence of a closing of such homesite in accordance with the Master Option Agreement or Other Agreements. Additionally, any new real property that the Property LLCs acquire while any portion of the Promissory Notes remains unpaid or unsatisfied shall automatically be subject to the lien of the Mortgages or of similar mortgages or deeds of trust. Pledge and Security Agreements In connection with the Promissory Notes, MPH Parent and certain other TRSs entered into the pledge and security agreements with Millrose (the “Pledge and Security Agreements”), pursuant to which such TRSs pledged a first priority perfected, continuing security interest in and lien on 100% of its membership interests in each Property LLC and in all proceeds thereof (the “Pledged Collateral”) as collateral for the note borrower’s performance of its obligations under the Promissory Notes and Mortgages. Except during the continuance of a Promissory Note event of default, note borrower will have the right to receive all distributions, interest and proceeds in respect of the Pledged Collateral. In the event that a TRS of Millrose acquires additional land assets, the Pledge and Security Agreements may be further amended to reflect such acquisitions. Alternatively, MPH Parent or another TRS of Millrose may enter into one or more additional pledge and security agreements that are similar to the Pledge and Security Agreements. REIT Tax Election and Income Taxes We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Code and expect to qualify as a REIT when we file a REIT tax election with our federal income tax return for the taxable year ended December 31, 2025. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. Taxable income from certain non-REIT qualifying activities is derived through our TRSs and is subject to applicable U.S. federal, state, and local income and franchise taxes. During the three and six months ended June 30, 2026, we recorded consolidated income tax expense of $2.5 million and 35 $7.5 million, respectively, which was attributable to our TRSs. During the three and six months ended June 30, 2025, we recorded consolidated income tax expense of $4.8 million and $9.1 million, respectively, which was attributable to our TRSs. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. In addition, our TRSs are fully subject to applicable U.S., federal, state, and local income and franchise taxes. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT. We evaluate the tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the applicable statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time. We evaluate our tax positions using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement. We had no material unrecognized tax benefit or expense, accrued interest or penalties as of June 30, 2026 or December 31, 2025. Our TRSs are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Critical Accounting Estimates The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting estimates are those that involve a high degree of judgment and uncertainty and for which changes in assumptions could have a material impact on our condensed consolidated financial statements. Our significant accounting policies are described in Note 2, Basis of Presentation and Significant Accounting Policies of the notes to the condensed consolidated financial statements included in “Part I, Item 1 Financial Statements” of this Form 10-Q. The following are the critical accounting estimates that require us to exercise our business judgment or make significant estimates: Homesites Under Option Contracts We evaluate our homesite option contracts at inception to determine if they contain a lease as defined under ASC 842. Determining whether these option agreements should be accounted for under ASC 842 required management to apply significant judgment, including assumptions about whether the homebuilders (i) obtain substantially all of the economic benefits from use of the asset and (ii) have elements of control of the optioned assets. Changes in these assumptions could significantly affect the timing of revenue recognition in the Company’s condensed consolidated financial statements. The Company's option contracts with its counterparties grant the counterparties the exclusive right to acquire homesites owned by the Company at predetermined prices and takedown schedules. Although the Company retains legal title to the land during the option agreement term, the counterparties obtain substantive rights to direct the planning, use, and development of the homesites. Because the Company transfers elements of control of the homesites to the counterparties during the option contract period, we account for homesites under option contract under ASC 842. The Company accounts for option fee contracts as sale-type leases under ASC 842 because the Company concluded that the purchase options are reasonably certain of being 36 exercised. Option fee income is recognized over the term of the contract using an effective interest yield. Monthly option fees may vary over time based on reimbursable development costs, changes in takedown timing or volume, or other contractual adjustments, and such changes are recognized prospectively through an updated effective interest yield over the term of the option contract. Homesites under option contracts consist of land and related development costs associated with homesites subject to option contracts. The carrying value of homesites under option contracts is recorded based on the Company's capital funded under the option contracts, which includes the land acquisition costs, qualifying development costs and other directly attributable costs incurred on the underlying land. When a counterparty completes a takedown and homesites are transferred in accordance with the option contract, the Company derecognizes the related carrying amount from the condensed consolidated balance sheets. Because our option contracts are accounted for as sales-type leases, the resulting asset, representing our right to receive future takedown payments and option fees, is considered a contractual right to receive cash. Therefore, the Company evaluates expected credit losses for homesites subject to option contracts in accordance with ASC 326. Expected credit losses are estimated using a weighted average remaining maturity (“WARM”) methodology, which applies an annual loss rate to the estimated remaining life of the related contract balance and is adjusted for expected cash flows and relevant qualitative factors. Qualitative considerations include the counterparties' consistent payment performance, the absence of delinquencies or defaults since inception, historical charge off rates for residential housing, and cross-collateralization features across certain counterparty arrangements. The Company also considers the credit quality of its most significant counterparties. After considering these factors, the Company determined that the risk of loss was immaterial as of June 30, 2026. Development Loan Receivables, Net Development loan receivables, net are recorded at amortized cost, which includes principal amounts due and PIK interest, net of principal repayments and an allowance for credit losses. We estimate expected credit losses on development loan receivables in accordance with ASC 326, using a WARM methodology. Under this approach, we apply an annual charge-off rate to the estimated remaining life of the development loan portfolio, adjust for expected cash flows, and further adjust the historical baseline for qualitative factors, including current economic conditions and reasonable and supportable forecasts of future economic conditions. Accrued PIK interest is included in the amortized cost basis of the development loans for purposes of calculating the allowance for credit losses. The allowance for credit losses is a critical accounting estimate because it requires significant judgment in determining the annual charge-off rate, expected cash flows, and the qualitative adjustments applied to reflect current conditions and forward-looking information. These judgments are informed by ongoing monitoring of borrower and project performance and broader market conditions affecting residential development activity. Changes in borrower performance, collateral values, expected cash flows, portfolio composition, or macroeconomic conditions could result in changes to the allowance for credit losses and the provision for (benefit from) credit losses in future periods. Recent Accounting Standards For discussion of recently issued accounting standards, see Note 2. Basis of Presentation and Significant Accounting Policies of the notes to the condensed consolidated financial statements included in “Part I, Item 1 Financial Statements” of this Form 10-Q. 37