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Lennar shares fell Friday, October 2, after research firm Hunterbrook published a report questioning the homebuilder’s sales of completed houses to Millrose Properties, the land-bank real estate investment trust that Lennar spun off in 2025. Hunterbrook said it identified more than 700 purchases by Millrose from Lennar across at least 51 counties in 15 states in roughly a month, with an estimated value of about $200 million.
The report raised questions about the scale and economics of the transactions, as well as the companies’ ties. The reaction added to pressure from a bearish analyst initiation the previous day and Lennar’s recent earnings showing lower home-sale revenue and narrower margins. Investing.com reported Lennar was down 5% in midday trading; a separate report later described a 2.9% decline, reflecting different snapshots of the session.
Hunterbrook’s report puts a spotlight on related-party transactions
Hunterbrook said its review of property records found at least 356 Millrose purchases during the final week of Lennar’s fiscal third quarter. Lennar reported 20,840 home deliveries for the quarter ended August 31, 2026, slightly above the bottom of its 20,500-to-21,500 forecast range. Hunterbrook argued that the purchases may have contributed to the company meeting that delivery target, but the public records it reviewed do not establish the full circumstances of each transaction.
The research firm’s findings are allegations, not independently confirmed conclusions. Hunterbrook disclosed that its investment arm held short positions in both Lennar and Millrose when the report appeared, a financial interest readers should consider in assessing its claims. Lennar had not responded to a request for comment by the time of Investing.com’s report.
Millrose’s role expanded beyond holding land
Lennar created Millrose as a separate company to hold land and homesites, allowing Lennar to secure development options rather than carry all the land directly. Hunterbrook said Millrose’s initial filings described a land-holding business that would not have tenants or occupants. On August 27, however, Millrose amended agreements with Lennar subsidiaries to permit purchases of completed homes for use as rentals; the companies disclosed the amendments in a September filing, according to Hunterbrook.
The report also highlighted governance and revenue links. It said Lennar chief executive Stuart Miller holds about 43% of Millrose’s voting power, and that Lennar accounted for 72% of Millrose’s revenue in its latest quarter. Millrose has warned investors in filings that its agreements with Lennar were not negotiated at arm’s length and could be viewed as more favorable to Lennar than agreements with an unrelated party. Those disclosures describe potential conflicts; they do not, by themselves, establish wrongdoing.
Rental economics and analyst concerns add to investor focus
Hunterbrook estimated the homes could produce annual rental returns of about 5% after property expenses, below the 6.5%-to-6.75% interest rates on a recent Millrose bond offering. It also compared recorded purchase prices with other sales and estimated that Millrose paid more than individual buyers in the same communities, after accounting for Lennar’s reported buyer incentives. The firm cautioned that differences between homes and incentives not visible in property records could affect those comparisons.
Separately, Morgan Stanley began coverage of Lennar on Thursday with an Underweight rating and a $65 price target, according to Investing.com. The analyst cited pricing pressure and costs associated with Lennar’s land-light model as risks to margins. The rating preceded Hunterbrook’s report and offered a second reason investors were reassessing the homebuilder’s outlook.
Recent results show an existing margin squeeze
Lennar’s third-quarter results, released September 16, showed home-sale revenue fell 6% year over year to $7.7 billion. Deliveries declined 3% to 20,840 homes, while the average selling price fell 3% to $372,000. Gross margin on home sales narrowed to 15.8%, from 17.5% a year earlier, which the company attributed mainly to lower revenue per square foot and higher land costs.
The company forecast 22,000 to 23,000 deliveries in its fiscal fourth quarter and a home-sale gross margin of 15.5% to 16%. It also lowered its full-year 2026 delivery target to 80,000 to 81,000 homes from the 82,000 to 83,000 range it had previously discussed, citing continued interest-rate pressure and deteriorating market conditions.
What remains unresolved
Hunterbrook’s report makes the relationship between Lennar and its former land-holding affiliate a fresh focus for investors, but the available reporting does not establish how Lennar or Millrose will respond to the allegations or whether regulators will review the transactions. The companies’ August amendments authorize Millrose to buy and rent completed homes; the scale and financial contribution of that activity beyond Hunterbrook’s records-based estimate remain unclear.
