Cox, Castle & Nicholson LLP served as lead counsel to Millrose Properties, Inc., a recently spun-off homesite option purchase platform for residential homebuilders, on its role in funding New Home Co.’s acquisition of Landsea Homes Corporation, which closed in late June. The transaction, which makes New Home one of the 25 largest privately held homebuilders in the U.S., marked the first time that proceeds from a land bank financing facility were used at this scale for a merger and acquisition. 

Millrose Properties funded more than $500 million of the acquisition, which involved simultaneously closing on a multitude of properties across five states, through a land banking facility. The Miami-based company acquired the homesites under option with New Home in connection with the Landsea acquisition. The transaction also entailed an equity contribution from funds managed by affiliates of Apollo and a senior notes offering by New Home. 

The Cox Castle team was led by partners Erica Bose and Matthew Levy, with essential support from partner Laura Cable, senior counsel Melissa Clark, and associates Joshua Min and Rupal Agrawal. First American Title provided escrow and title services for all transactions. 

“This transaction is a significant milestone for the industry,” said Bose. “Utilizing land banking as a financing tool in an M&A context is groundbreaking and reflects the kind of creative legal and financial structuring at which our team excels. This is the first time land banking capital has been utilized at this scale to fund the acquisition of a public company, establishing an innovative model that could influence future financing strategies within the homebuilding industry.” 

Cox Castle’s team of 14 attorneys coordinated closely with Millrose Properties, New Home, and First American Title, leveraging their familiarity with the key players in the transaction. Levy said, “Our deep bench of attorneys, with expertise across real estate, land use, and finance, worked intensively over a five-week period to close this complex deal efficiently and on time.” 

The transaction also highlights broader changes in the land banking market. Historically, land banking was primarily used by public homebuilders on an asset-specific basis to allow entitled but undeveloped land to remain off balance sheet until the lots were horizontally improved. Over the past several years, though, land bank transactions have expanded to include some portfolio-level deals. More recently, they have evolved to provide financing for finished lots, sometimes through transactions involving an asset that was previously land banked when initially acquired and improved.  

Builders are increasingly looking to enhance their return on investment and reserve dry powder by reducing land ownership while still retaining control over development pipelines. In the past two years alone, Cox Castle has advised on approximately 125 land banking transactions for multiple clients representing more than $2 billion in value. 

“The success of this deal came down to the close collaboration among sophisticated parties,” added Levy. “Millrose Properties served as a creative and instrumental financing partner for New Home, which is a dynamic builder with an ambitious growth strategy. Together, they executed a groundbreaking deal that sets a new precedent in M&A financing for the homebuilding industry.” 

Pictured: rendering of a Landsea Homes project