Millrose Properties Inc Class A (MRP) Risk Analysis

As discussed above, there is a limited history of an active trading market for our Class A Common Stock. Further, the lack of public company peers may also increase volatility in the market price of our Common Stock. For many reasons, including the risks identified in this Form 10-K, the market price of our Class A Common Stock may be volatile. These factors may result in short or long-term negative pressure on the value of our Common Stock. Following the Spin-Off, Lennar owned 20% of the outstanding shares of our Common Stock (in the form of our Class A Common Stock) and disposed of this stock through the Exchange Offer, which expired on November 21, 2025. Lennar may also dispose of additional shares of our Class A Common Stock and our Class B Common Stock that are forfeited back to Lennar by its employees through a subsequent spin-off, split-off, public offering, private sale or any combination of these potential transactions. Additionally, other stockholders may decide to dispose of some or all of our Class A Common Stock that they received in the Spin-Off, which may generally be sold at any time in the public market. Further, as described under "Part I. Item 1. Business- Operational Agreements with Lennar-Founder's Rights Agreement," Lennar has an Effective Equity Price Protection Right, whereby in the event that Millrose issues additional shares of our Class A Common Stock (or any other equity securities in a manner consistent with its Charter) within 18 months of the date of the Spin-Off to any Other Counterparty in exchange for future property assets in a transaction consistent with the Applicable Rate Adjustment Right and with an aggregate value in excess of $500 million at a price per share lower than the price per share received by Lennar for the assets transferred to Millrose in connection with the Spin-Off, Millrose must issue an additional number of shares of our Class A Common Stock to Millrose stockholders equal to the number of additional shares the Lennar stockholders who received our Common Stock at the Distribution Date would have received if the Distribution had been executed at the same price per share as what the Other Counterparty received in connection with the Subsequent Bulk Assets Contribution, as calculated in the manner described under "Part I, Item 1. Business-Operational Agreements with Lennar-Founder's Rights Agreement" and distribute such shares to its stockholders in a stock dividend, subject to approval by the Board and in compliance with Maryland law. If too many stockholders sell our Class A Common Stock at the same time or if the Effective Equity Price Protection Right is exercised, our stock price might be reduced due to the influx of supply, especially if the number of shares being sold saturates the market and there is not enough corresponding demand. The sales of significant amounts of our Class A Common Stock, or the perception in the market that this may occur, may result in the lowering of the market price of our Class A Common Stock, and value of our Class B Common Stock, which may have a material adverse effect on our business, financial condition and results of operations. In particular, the Effective Equity Price Protection Right is effective for the 18-month period following the Spin-Off, which is a time when the stock price of newly public companies is likely to already be depressed, and so an issuance of a potentially significant amount of additional our Class A Common Stock to Millrose's stockholders, many of whom may decide to sell into the market following such distribution, would further depress an already likely depressed stock price.

Our Class B Common Stock is not listed on any exchange and we have no intent to list it in the future. Without an active market, our Class B Common Stock might be illiquid assets for which there is not expected to be any secondary market nor is it expected that any will develop in the future. Your ability to transfer shares of Class B Common Stock may be limited as result. As such, you may need to bear the risks of your investment in Class B Common Stock indefinitely. Individual shares of Class B Common Stock cannot be converted into Class A Common Stock. However, the holders of a majority of the outstanding Class B Common Stock can cause the entire class to be converted into Class A Common Stock. If that occurs, Millrose will no longer be authorized to issue Class B Common Stock.

There is currently a limited history of an active trading market for our Class A Common Stock. Furthermore, a robust active trading market for our securities may not be sustained. You may be unable to sell your securities unless a market can be sustained. Whether an active public trading market for shares of our Class A Common Stock will continue will depend on a number of factors, including the extent of institutional investor interest in us, the reputation of REITs generally and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies), our actual and projected financial results, our distribution policy and general stock and market conditions. Therefore, purchasers of our Class A Common Stock should have a long-term investment intent and should recognize that it may be difficult to sell the shares, notwithstanding the fact that they are not restricted securities.

As a public company, we are subject to the reporting requirements of applicable laws and regulations, including the Exchange Act, Sarbanes-Oxley Act and Dodd-Frank Act, and the rules and regulations of the NYSE, which impose various requirements on listed companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We are entirely reliant on our Manager for compliance with our public company responsibilities. These requirements make some activities more difficult, time-consuming, and costly, and place significant strain on the Manager's personnel, systems and resources. Our Manager does not have experience managing a public company and may increase the risk of potential non-compliance. We are relying on the Manager in continuing to evaluate these rules and regulations and cannot predict or estimate the amount of additional costs to the Manager or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Our Charter provides that our Board may revoke or otherwise terminate our REIT election if our Board determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT, without stockholder approval. If we cease to be a REIT, we will not be allowed a deduction for dividends paid to stockholders in computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates and to state and local taxes, which may have adverse consequences on our total return to our stockholders.

Our Bylaws currently provide that unless we consent in writing to the selection of an alternative forum, only a state court of competent jurisdiction within the State of Maryland, or, if such state courts do not have jurisdiction, the United States District Court located within the State of Maryland, will be the sole and exclusive forum for: (1) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, and any action or proceeding asserting any Internal Corporate Claim, including without limitation: (i) any derivative action or proceeding brought on behalf of Millrose, other than any action arising under federal securities laws, (ii) any claim, or action or proceeding asserting a claim, based on an alleged breach of any duty owed by any director or officer or other employee of Millrose to Millrose or to the stockholders of Millrose, or (iii) any claim, or any action or proceeding, asserting a claim, against Millrose or any director or officer or other employee of Millrose arising under or pursuant to any provision of the MGCL or our Charter or our Bylaws, or (2) any action or proceeding asserting a claim against Millrose or any director or officer or other employee of Millrose that is governed by the internal affairs doctrine of Maryland law. The exclusive forum provision of our Bylaws does not apply to any action for which a court sitting in the State of Maryland does not have jurisdiction. The exclusive forum provision of our Bylaws does not establish exclusive jurisdiction in the courts of Maryland for claims that arise under the federal securities laws or claims arising under the Securities Act, or the Exchange Act or any claim for which the federal courts have jurisdiction. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares of Common Stock shall be deemed to have notice of and to have consented to these provisions of our Bylaws, as they may be amended from time to time.

The MGCL provides protection for Maryland corporations against unsolicited takeovers by addressing, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholder rights plan, (c) make a determination not to apply the Maryland Business Combination Act, or (d) act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under the MGCL, the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. The MGCL also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under the MGCL. The MGCL also provides that, unless exempted, certain Maryland corporations may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, certain issuances of shares of stock and other specified transactions with an "interested stockholder" or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person, or an affiliate or associate of the Maryland corporation, owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding stock of the Maryland corporation, unless the stock had been obtained in a transaction approved by its board of directors. The statute permits various exemptions from its provisions, including business combinations that are exempted by our Board prior to the time the interested stockholder becomes an interested stockholder. Our Board has adopted a resolution exempting any business combination involving us and any person from the provisions of this law, provided that such business combination is first approved by our Board, including a majority of directors who are not affiliates or associates of such person. The MGCL also provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of stockholders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares of stock owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares of stock entitled to vote on the matter. Control shares are generally voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within certain ranges of voting power, commencing at one-tenth or more of all voting power. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions. The control share acquisition statute does not apply to (1) shares of stock acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (2) acquisitions approved or exempted by the charter or bylaws of the corporation. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions of shares of our stock by the Millers and Vanguard. These and other provisions of the MGCL could have the effect of delaying, deferring or preventing a proxy contest, tender offer, merger or other change in control, which may have a material adverse effect on our business, financial condition and results of operations. Such restrictions under Maryland law are in addition to any restrictions and limitations relating to compliance with our REIT status or Millrose Holdings' compliance with its own status requirements. On the other hand, none of these provisions can guarantee that we will not have a change in control at some point in the future and, as discussed above, we could experience significant adverse effects to our business, financial condition and results of operations, as well as our ability to maintain operations if we do experience a change in control event and Lennar exercises its "poison pill" right. Millrose's Charter provides that, except as specifically exempted by Millrose's Charter or the Board, no person may own more than 9% of Millrose's outstanding stock. Millrose's Charter provides an excepted holder limit for the Miller Family to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, up to 12.8% in the aggregate, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our Common Stock or the outstanding shares of all classes or series of Millrose stock. In addition, the Board has authorized Lennar's retention of 20% of Millrose's outstanding Common Stock and may in the future approve other stockholders to own more than 9% of Millrose's outstanding stock. This makes it almost impossible for somebody to acquire control of Millrose without the approval of the Board.

In addition to any applicable anti-takeover defense measure provisions afforded under Maryland law, our Charter and Bylaws include certain provisions that may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination or an acquisition of Millrose, including provisions that: - authorize our dual-class capital structure, which provides our holders of our Class B Common Stock with the ability to significantly influence the outcome of certain matters requiring stockholder approval, even if they own less than a majority of our outstanding shares of Common Stock;- for so long as there are any shares of our Class B Common Stock outstanding, require a supermajority vote of the holders of our Common Stock, voting together without regard to class, to amend our Charter;- provide that vacancies on the Board be filled only by a majority of the directors then serving, even though less than a quorum and whether or not resulting from an increase in the size of the Board, and not by stockholders;- permit the removal of a director or the entire Board only by the affirmative vote of two-thirds of the holders of the votes entitled to be cast in the election of directors;- prohibit cumulative voting;- permit amendments to the Charter, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series we have authority to issue;- permit issuances of authorized but unissued Common Stock without stockholder approval (other than, except for distributions of our Class B Common Stock to holders of our Class B Common Stock, additional issuances of our Class B Common Stock);- authorize undesignated, or "blank check," preferred stock, which may contain voting, liquidation, dividend and other rights senior to our Common Stock and shares of which may be issued without the approval of the holders of our Common Stock;- establish advance notice procedures for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting or special meeting of stockholders; and - specify that only our Board, the chair of our Board, our chief executive officer or president or, upon the written request of stockholders entitled to cast not less than a majority of the votes entitled to be cast, our secretary can call special meetings of our stockholders. In addition, Lennar has a Management Succession Consent Right. However, there is no guarantee that we will not have a change in control at some point in the future. Lennar's rights pursuant to the Founder's Rights Agreement (as described under "Part I, Item 1. Business -Operational Agreements with Lennar-Founder's Rights Agreement") may allow Lennar to influence certain corporate matters and increase the risk that Lennar could use the consent right to hinder or delay Millrose's ability to carry out its intended business and strategy. As such, the Lennar's Founder's Rights may deter Other Counterparties from wanting to engage in business with Millrose, and could also increase the risk of concern and uncertainty for potential investors, which could depress the market price of our Class A Common Stock and the value of our Class B Common Stock.

Maryland law provides that directors have no liability in their capacity as directors if they perform their duties in good faith, in a manner they reasonably believe to be in the corporation's best interest and with the care that an ordinarily prudent person in a like position would use under similar circumstances. As permitted by the MGCL, our Charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: - actual receipt of an improper benefit or profit in money, property or services; or - a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated. In addition, our Charter authorizes us, and our Bylaws require us, to indemnify our directors and officers and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding for losses they may incur by reason of their service in those capacities unless their act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, they actually received an improper personal benefit in money, property or services or, in the case of any criminal proceeding, they had reasonable cause to believe the act or omission was unlawful. We entered into indemnification agreements with the directors and officers that are described herein. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. Accordingly, in the event that actions taken by any of our directors or officers are immune or exculpated from, or indemnified against, liability but which impede our performance, our stockholders' ability to recover damages from that director or officer will be limited. Any indemnification of our officers will also be subject to, and handled in accordance with, the Management Agreement and any ancillary agreements with KL.

The Miller Family has shares of our Class B Common Stock that gives it the power to cast approximately 43% votes that can be cast of all the votes by Millrose stockholders. Therefore, the Miller Family has the ability to influence Millrose's affairs and may have the ability to exercise control over them, including the election and removal of directors and other matters submitted to Millrose's stockholders for approval, amendments to Millrose's Charter and Bylaws, and significant transactions, if they are presented to Millrose's stockholders for approval. As long as the Miller Family has near majority voting power, the Miller Family will also have the power to impede or cause a change in control of Millrose. The Miller Family voting power probably would discourage a potential acquirer from attempting to obtain control of Millrose without approval of the Miller Family, which the Miller Family might withhold if a proposed acquisition provides a control premium to any stockholders other than the Miller Family. Millrose stockholders are not entitled to dissenters' rights of appraisal under Millrose's Charter or applicable Maryland law unless our Board determines that such rights apply. In addition to its near majority voting power of our Common Stock, the Miller Family may be able to exert influence over Millrose's business, by virtue of their relationship with Lennar and Lennar's relationship with Millrose. Given Stuart A. Miller's role as Executive Chairman and Chief Executive Officer of Lennar, it is possible that the Miller Family's interests may, in some circumstances, conflict with the interests of Millrose's other stockholders. Various conflicts of interest between Lennar, the Miller Family and Millrose could arise. Potential conflicts of interest could also arise if Millrose enters into any new commercial arrangements with Lennar or with Mr. Miller. Millrose entered into various agreements to govern Millrose's relationship with Lennar, including the Master Program Agreement, Master Option Agreement, Founder's Rights Agreement and others described under "Part I, Item 1. Business-Operational Agreements with Lennar." The agreements between Lennar, Millrose and Millrose Holdings were not based on arm's-length negotiations and were not approved by any of our independent directors as these were executed prior to the date of the Spin-Off. In addition, Lennar had significant influence in structuring the Spin-Off. Nobody separately represented Millrose in structuring the Spin-Off. It is possible that Millrose could have negotiated more favorable terms of the Lennar Agreements if it had engaged in arm's length negotiations with Lennar.

Certain index providers have announced restrictions on including companies with multiple share class structures in certain of their indices. For example, in July 2017, FTSE Russell and Standard & Poor's announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Under the announced policies, our dual-class capital structure makes us ineligible for inclusion in any of these indices. Although S&P Dow Jones, a provider of widely followed stock indices, reversed its prior decision to exclude companies with multiple share classes, such as ours, in certain of their indices, and we have been included in the S&P SmallCap 600, there is no guarantee that our Class A Common Stock will be included in any additional Standard and Poor's index, despite their eligibility. The Council of Institutional Investors remains strongly opposed to dual-class structures and some investors may continue to avoid investing in companies with dual-class structures like ours. In addition, several stockholder advisory firms oppose the use of multiple class structures. As a result, our Class A Common Stock may not be included in certain stock indices and may cause stockholder advisory firms to publish negative commentary and recommendations about our corporate governance practices (including recommendations that stockholders vote against re-election of directors) or otherwise seek to cause us to change our capital structure. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make our Class A Common Stock less attractive to certain other investors. Additionally, any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could adversely affect the value of our Class A Common Stock and the market price of our Class B Common Stock. Lennar, as the original parent company of Millrose and the initial contributor of the assets transferred to Millrose in connection with the Spin-Off, has certain Founder's Rights, which are exclusive to Lennar. These rights, pursuant to the Founder's Rights Agreement, include the Management Succession Consent Right, the Effective Equity Price Protection Right, the Enforcement Rights, the Applicable Rate Adjustment Right, the Capital Priority Right, the Secured Financing Collateral Consent Right, and the Pause Period Designation Right, among others (see "Part I, Item 1. Business-Operational Agreements with Lennar-Founder's Rights Agreement" for a full description of the Founder's Rights). The Founder's Rights granted to Lennar could deter potential Other Counterparties from doing business with us and could deter potential investors, which could adversely affect the value of our Class A Common Stock and the value of our Class B Common Stock.

Pursuant to our Charter, we have two classes of Common Stock: Class A Common Stock and Class B Common Stock. The Class A Common Stock is listed on NYSE and publicly traded under the symbol "MRP". We have no intention of listing the Class B Common Stock at this or any other time. As a result, your ability to transfer shares of Class B Common Stock may be limited, and you may need to bear the risks of your investment indefinitely. Individual shares of Class B Common Stock cannot be converted into Class A Common Stock; however, holders of a majority of the outstanding Class B Common Stock can cause the entire class to be converted into Class A Common Stock, and if that occurs, Millrose will no longer be authorized to issue Class B Common Stock. The Class B Common Stock has ten votes for each share of Class B Common Stock held in the holder's name, except when voting together with the holders of the Class A Common Stock, each holder of record of Class B Common Stock is entitled to the greater of (i) ten votes per share or (ii) that number of votes per share of Class B Common Stock that would entitle the outstanding shares of Class B Common Stock to cast, in the aggregate, 35% of the votes entitled to be cast on the matter, whereas the Class A Common Stock has one vote per share. Subject to the provisions of the Charter, with respect to all matters upon which stockholders are entitled to vote, the holders of the outstanding shares of Class A Common Stock and the holders of the outstanding shares of Class B Common Stock will vote together without regard to class (other than as to the number of votes per share). Notwithstanding the foregoing, so long as there are any shares of Class B Common Stock outstanding, any amendment to the Charter (except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Charter) must be approved by the affirmative vote of the holders of two-thirds in voting power of the Class A Common Stock and Class B Common Stock, voting together without regard to class. Once there are no longer any shares of Class B Common Stock outstanding, the Charter may be amended only if the amendment is approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter. Additionally, any merger, consolidation, sale of all or substantially all of our assets or other business combination involving Millrose that is submitted for approval of the Millrose's stockholders must be approved by both (i) a majority of the voting power of the votes entitled to be cast by all stockholders of Class A Common Stock and Class B Common Stock, voting together without regard to class, and (ii) a majority of the total outstanding votes entitled to be cast by all stockholders of Class B Common Stock, voting as a separate class. In addition, so long as any shares of Class B Common Stock are outstanding, Millrose shall not, without the affirmative vote of at least two-thirds of the shares of Class B Common Stock outstanding, voting separately as a class, issue additional shares of the Class B Common Stock (other than in connection with dividends or other distributions paid with shares of Class B Common Stock solely to holders of Class B Common Stock). As a result, holders of Class B Common Stock (which is currently held almost entirely by the Miller Family, as discussed below) have the ability to prevent Millrose from taking actions that may be viewed negatively by the Miller Family but might otherwise be viewed by other stakeholders as in the interests of Millrose and its stockholders. As a result, the holders of the Class B Common Stock may have the ability to control the outcome of certain matters requiring stockholder approval for the foreseeable future, including the election of directors, even if their stock holdings represent less than a majority of the outstanding shares of Common Stock. This concentration of voting power will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests. This influence may adversely affect the market price of Class A Common Stock and the value of the Class B Common Stock. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our Common Stock that you may feel are in your best interest as one of our stockholders. A significant portion of the voting power of our Common Stock is held by the Miller Family, whose interests may differ from or conflict with the interests of Millrose stockholders. Our Class B Common Stock will convert automatically into Class A Common Stock, on a one-for-one basis, upon the approval of the conversion, in whole, but not in part, of all shares of our Class B Common Stock, then outstanding by the holders of a majority of the outstanding shares of our Class B Common Stock. If that occurs, Millrose will no longer be authorized to issue our Class B Common Stock. Individual shares of our Class B Common Stock cannot be converted into our Class A Common Stock. In addition, while we do not currently expect to issue any additional shares of our Class B Common Stock, and any such issuance requires the approval of the holders of our Class B Common Stock, any future issuances of our Class B Common Stock would be dilutive to both holders of our Class A Common Stock and our Class B Common Stock. Such issuances would also reduce the voting power of our Class A Common Stock as compared to our Class B Common Stock and could further concentrate the voting power of holders of our Class B Common Stock relative to holders of our Class A Common Stock. Additionally, so long as there are any shares of our Class B Common Stock outstanding, and notwithstanding any future issuances of our Class A Common Stock, holders of our Class A Common Stock will not be entitled to cast more than 65% of the votes entitled to be cast by the holders of Common Stock and any other classes or series of stock entitled to vote with the Common Stock. Holders of our Class B Common Stock may be entitled to cast more than 35%, and holders of our Class A Common Stock may only be entitled to cast less than 65%, of the votes entitled to be cast by the holders of Common Stock and any other classes or series of stock entitled to vote with the Common Stock, if the number of outstanding shares of our Class B Common Stock multiplied by 10 (the "Class B Initial Vote") is greater than 35% of the number of outstanding shares of our Class A Common Stock plus the Class B Initial Vote. It is possible that our dual-class structure, combined with the concentrated influence of our Class B Common Stockholders, will result in a lower or more volatile market price of our Class A Common Stock or in adverse publicity or other adverse consequences.

Companies with external management structures may more often be subject to dissident stockholder proposals and litigation alleging conflicts of interest in their business dealings. Our relationships with KL, Kennedy Lewis, and Lennar may heighten this risk. In addition, proxy advisory firms, which exert influence over institutional voting, may recommend that stockholders withhold votes for incumbent directors, vote against our say-on-pay proposals, or support stockholder proposals we oppose. Such recommendations could affect the outcome of director elections and other stockholder votes, potentially increasing activism and litigation. These activities, if initiated against us, could result in substantial costs, divert management's attention, and materially and adversely impact our reputation and business.

Under the Management Agreement, KL is entitled to receive substantial compensation regardless of performance, based on the aggregate size of Tangible Assets. This structure may incentivize KL to recommend riskier or more speculative investments, including significant acquisitions of additional land assets, to increase the total assets under management and, consequently, its fees. For example, because the Management Fee is calculated based on our total land and other real estate assets, KL may have an incentive to use higher leverage or acquire land assets on less favorable terms to grow the asset base. KL's ability to earn higher fees and reimbursements depends on our continued investment in land and other real estate assets, which may conflict with stockholders' interest in achieving sustainable returns on their investment in our Common Stock.

Under the Management Agreement, KL's responsibilities are limited to providing the services specified in that agreement, and KL is not liable for any action taken by our Board in following or declining to follow KL's advice or recommendations. While officers recommended by KL and appointed by our Board owe duties under Maryland law, including duties of care, loyalty, good faith, and candid disclosure, KL itself, as Manager, maintains a contractual rather than fiduciary relationship with us. Additionally, we have agreed to indemnify KL and each of its officers, directors, members, managers, and employees, against claims or liabilities (including reasonable legal fees and expenses) arising from our business and operations or actions taken on our behalf under the Management Agreement, except where attributable to gross negligence, willful misconduct, bad faith, or reckless disregard of duties. These indemnification protections and the absence of fiduciary obligations may incentivize KL to act in a riskier manner when managing our affairs than it would when acting for its own account, which could materially and adversely affect our business, financial condition, and results of operations.

We are dependent on KL to manage our operations and acquire and manage our real estate assets. Under the direction of our Board, KL makes all decisions with respect to the management of our business operations and obligations as a public company. KL depends upon the fees and other compensation that it receives from us to conduct its own operations. Any adverse changes in the financial condition of KL or its affiliates, or any adverse change in our relationship with KL, could hinder KL's ability to effectively manage our operations and investments, which would adversely affect us and our stockholders.

We rely on KL to identify, consummate, and manage new business opportunities for us. There is no guarantee that KL can successfully manage new projects added to our portfolio in the future. Our ability to make investments on favorable terms may be constrained by contractual restrictions, competition from traditional land banking providers (including other publicly traded REITs and institutional investment funds), which may significantly increase transaction costs, and the inability to finance a transaction on favorable terms or at all. Failure to identify or consummate acquisitions or future dispositions of land assets with counterparties on satisfactory terms, or at all, may impede our growth and negatively affect our cash available for distribution to our stockholders.

Our Board has discretion to establish and amend our major policies, including those described herein, subject to existing contractual obligations and limitations described herein. These policies may be revised or amended without stockholder approval. Your inability to exert control over our policies and operations may increase uncertainty and risks you face as a stockholder. Our Board's discretion is subject to constraints under the Founder's Rights Agreement with Lennar, which grants Lennar approval rights over certain Board actions, including the appointment of a replacement manager pursuant to its Management Succession Consent Right. In addition, our Charter contains protective governance provisions requiring that certain actions receive approval from holders of Class B Common Stock voting separately as a class, in addition to approval from holders of Class A Common Stock and Class B Common Stock voting together. As of December 31, 2025, the Miller Family owns approximately 98.7% of the Class B Common Stock, representing approximately 43% of the total voting power of our outstanding stock, and has influence over the outcome of matters requiring a stockholder vote. These governance provisions and consent rights may significantly limit your ability as a stockholder, particularly as a holder of Class A Common Stock, to influence our policies and operations. As our Manager, KL is authorized to operate within broad business and operating guidelines and has significant discretion in identifying and managing land assets and making individual operating and business decisions. While our Board periodically reviews our guidelines, operating activities, and investments, it does not approve each decision made by KL and relies primarily on information provided by KL during these reviews. Transactions entered into by KL may be costly, difficult, or impossible to unwind by the time they are reviewed by our Board. Within the broad parameters of our acquisition guidelines, KL has latitude to determine the types and amounts of assets to acquire and invest in on our behalf, which could include transactions that deliver returns substantially below expectations or result in losses. Such outcomes could materially and adversely affect our business, financial condition, and results of operations. In the future, our Board's oversight may be subject to additional limitations under other agreements or, alternatively, may gain increased flexibility in our business operations.

Our Real Estate Portfolio currently primarily consists of the lands assets acquired under the Lennar Agreements and Other Agreements, under which the properties have a relatively short cash conversion cycle. There can be no assurance that the profile of our Real Estate Portfolio will always be similar to that of our current land assets. There is no certainty that Millrose will be able to successfully negotiate with regard to land assets that share similar characteristics to our current land assets. Although we expect some of its future land assets to generally match the profile of our current land assets, we expect that many of our future land assets may have a different profile. We may adjust our Real Estate Portfolio based on real estate market conditions and business opportunities, and we may change our Investment Guidelines at any time without the consent of our stockholders, subject to the terms of our counterparty agreements. In the future, we may make business decisions that result in us making investments in land assets that are different from, and possibly riskier than, those described in this Form 10-K. In connection with such changes in our targeted land assets and strategies, our Board may also change our policies over time. Any such changes to our targeted land asset acquisition guidelines could increase our exposure to interest rate risk, default risk, and real estate market fluctuations, which could materially and adversely affect the value of our Common Stock, our ability to make distributions, and our business, financial condition, and results of operations.

We entered into the Lennar Agreements and Management Agreement simultaneous with the Spin-Off from Lennar. These agreements were prepared at Lennar's direction, in consultation with its strategic advisor, Kennedy Lewis. Because Lennar's and Millrose's interests may have differed when these agreements were negotiated, the agreements may not have fully reflected Millrose's best interests. Risks associated with conflicts of interest in our agreements with Lennar include, but are not limited to, the following: - Because we lacked independent management prior to the Spin-Off, the agreements we entered into were not negotiated at arm's length, and we did not independently confirm that their terms were consistent with market standards. As a result, the terms of these agreements may be more favorable to Lennar than if Lennar had negotiated with an unaffiliated third party, and we cannot assure you that they are as favorable to Millrose as would have resulted from arm's-length negotiations. - Certain Lennar Agreements, including the Founder's Right Agreement, include rights exclusive to Lennar that we cannot offer to Other Counterparties, which may reduce our negotiating leverage with Other Counterparties. These rights may not align with the interests of our stockholders now that we are a publicly traded company and may differ from terms (and Bylaws provisions) that we could have obtained through arm's-length negotiations with unaffiliated third parties. As a result, these rights could limit our flexibility, deter potential investors and counterparties, and adversely affect the market price of our Class A Common Stock and in turn the value of our Class B Common Stock. - Certain terms in the Lennar Agreements may hinder our ability to expand our business, attract new counterparties to use our homesite option platform, or negotiate competitive terms with counterparties other than Lennar. - Some terms in the Lennar Agreements make it difficult for us to amend them without significant cost and effort, and without obtaining Lennar's written consent. We cannot assure you that we will be able to renegotiate, amend, or terminate any agreements, or specific provisions, that we consider unfavorable or adverse to our interests. Our continued obligations under these agreements could materially and adversely affect our business, growth opportunities, financial condition, and results of operations. - Certain of the rights granted to Lennar in the Founder's Rights Agreement are exclusive to Lennar, which will require our Board to enforce such rights. - Assets acquired from Lennar in connection with the Spin-Off, in the Rausch Transaction, and all other land assets acquired under the Lennar Agreements were placed into pools under certain Multiparty Cross Agreements. Future property assets acquired under the Lennar Agreements will also be pooled under additional Multiparty Cross Agreements (or added to existing Multiparty Cross Agreements). These pools were structured primarily for diversity across geographies, communities, and home types, but the selection and pooling decisions were made solely by Lennar, with input from Kennedy Lewis, before we had independent management. As a result, the criteria used may not reflect standard market practices, and we cannot assure you that the composition of these pools will be favorable to us. If assets within a pool are negatively affected by market or operational factors, the value of all assets in that pool could decline at the same time. Although pooling is intended to follow broad diversification principles, Lennar retains substantial discretion in selecting pool properties and setting pool terms. We may have limited ability to negotiate pooling conditions with Lennar or Lennar Related Ventures, and we may not be able to negotiate pooling terms at all with Other Counterparties.