Investors hit real estate company Millrose with fraud class action over undisclosed leases
Investors Leon and Sylvia Rubenstein filed a class action against Millrose Properties and two executives, alleging the Miami real estate company misled shareholders by quietly buying at least $200 million in completed homes from its former parent, homebuilder Lennar, and renting them out, reportedly at a loss. Millrose's own prospectus had stated flatly that it would not have lease agreements or tenants on its properties, a claim the suit says was false by the time of an October report identifying over 700 such purchases across 15 states.
The allegations build on reporting by Hunterbrook Media, which found Millrose amended agreements with Lennar subsidiaries in August to allow the rental arrangement, and that Millrose told Goldman Sachs the homes were part of a rent-to-own program with tenants already lined up. Reporters who visited dozens of the properties in Florida and Texas found them unoccupied, and a property manager said no rent-to-own program existed.
Millrose's shares fell 8.5% after the October report. The investors note Lennar is Millrose's largest customer and its CEO holds roughly 43% of Millrose's voting power, a structure they say created the conflict of interest now at issue.
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