Every so often, I take part in sure inventory trade gives which embrace a particular provision for smaller traders, referred to as “odd lot tenders”. You’ll find extra background data on these short-term “arbitrage” performs within the final two gives that I joined: Cummins/Atmus Filtration and Johnson & Johnson/Kenvue.
Just lately, Lennar (primarily a homebuilder) introduced such an trade supply as they attempt to full their spinoff of Millrose Properties (an REIT, primarily a land financial institution). This time, Wealthy Howe of StockSpinoffInvesting.com – who has much more expertise with these offers than me – has generously agreed to share his abstract and evaluation of the deal. Please take pleasure in the next visitor submit:
—
Purchase Lennar – Alternate Provide – Particular State of affairs
October 15, 2025
LEN: $122.21
Market Cap: $30BN
Suggestion: Purchase 99 shares of LEN, Alternate for shares of MRP
Anticipated Revenue: $772 / 6.4%
Abstract
Lennar (LEN) introduced an trade supply on October 10, 2025 whereby traders can trade their LEN shares for shares of Millrose Properties (MRP), Lennar’s land financial institution spin-off. To incentivize the trade, LEN traders will obtain $106.43 of worth in MRP shares for each $100 of worth in LEN shares. I anticipate the trade supply to be oversubscribed. Nonetheless, there’s an odd lot provision such that any LEN shareholders with 99 shares or much less (odd lot provision) is not going to be prorated. Thus, there is a chance to purchase 99 shares of LEN and trade them for shares of MRP. This could end in a revenue of ~6.4% / ~$757 (at present costs) in lower than a month. The revenue is just not assured (after all!) however is low danger, in my view. To take part on this trade supply, it’s essential to contact your dealer (you might be able to take part within the trade supply on-line). It is not going to occur robotically.
Deadline: The trade supply will expire on November 7, 2025. So that is time delicate. Brokers sometimes require traders to provide them discover in regards to the trade effectively earlier than the official deadline. Schwab’s deadline will doubtless be November 5, 2025, however it could be prudent to purchase on November 3, 2025 on the newest because it takes two days for shares to settle. I’m planning to purchase 99 shares of LEN shares on or earlier than November third after which instantly name Schwab and ask to take part within the trade supply. Different brokers (Constancy, Interactive Brokers, and so forth.) have their very own inside deadlines that are sometimes after the Schwab deadline.
Further Particulars
Lennar (LEN) spun-off ~80% of Millrose Properties (MRP), its land financial institution, in February 2025.
It retained ~20% of the enterprise.
On October 10, 2025, Lennar formally introduced that it could spin off its remaining ~20% stake in Millrose Properties by way of an trade supply.
I’ve highlighted key phrases however you’ll be able to go to the transaction’s dwell web site with further particulars.
For each $100 shares of LEN that you just personal, you’ll obtain $106.38 of MRP shares.
Since this trade represents a lovely return in a brief time frame, I anticipate the providing to be oversubscribed (just like earlier trade gives that I’ve coated).
Nonetheless, there’s an odd lot provision such that in the event you personal fewer than 100 shares, you’ll not prorated.
Right here is the trade supply submitting and a web site which tracks the trade supply indicative trade ratio.
This providing is similar to the various different break up off/trade gives that we’ve participated in.
Examples:
Find out how to Execute the Commerce
LEN is at present buying and selling at $122.21 per share.
MRP is at present buying and selling at $31.96.
Right here’s how the maths works at present worth ranges.
Step 1
Purchase 99 shares of LEN for $122.21 per share. Whole value of $12,099.
Step 2
Per the trade supply, shareholders who elect to trade their LEN shares will obtain MRP shares at a 6% low cost or at a worth of $30.04 ($31.96 x (1-6%)). The MRP worth hasn’t been finalized but. However I’m utilizing the present worth plus the low cost as I feel that’s one of the best ways to approximate what the precise worth shall be. The precise worth shall be decided by a formulation laid out right here.
$12,099 / $30.04 = 402.72 shares of MRP
402.72 shares of LEN / 99 shares of MRP = 4.07. 4.07 is decrease than the max trade ratio of 4.1367. If the ratio have been increased than 4.1367, the variety of MRP shares can be maxed out at 409 (4.1367 * 99).
Step 3
Promote MRP shares which can be obtained as soon as the trade goes via. It often takes Schwab a few week to course of the trade supply. I anticipate to obtain my MRP shares by November 14, 2025 or shortly thereafter.
At present costs, the commerce is predicted to generate a revenue of $772.
When it comes to timing, the trade supply expires on November 7, 2025 (except LEN modifications it), and so I like to recommend that you just purchase LEN shares no later than November third to make sure you make the deadline (it takes two buying and selling days in your buy to settle and brokers inside deadlines are often 2 days previous to the official firm deadline). After you buy shares, name your dealer and ask them to tender your shares. That is necessary. Your participation within the trade isn’t automated.
I created a spreadsheet to trace the profitability of this commerce. Here’s a screenshot of it:
You may entry the spreadsheet right here: LEN / MRP Alternate Provide Spreadsheet
(to edit, make a duplicate of the spreadsheet and plug in your individual assumptions)
Ideas on Millrose Properties?
Millrose was created when Lennar contributed ~$5.5 billion in undeveloped, partially developed, and a few totally developed land belongings, together with as much as $1 billion in money, to Millrose. Millrose operates as an impartial entity, buying and creating land to ship completed homesites beneath land possibility contracts. On the time of the spin-off, it solely served Lennar but it surely plans to interact with different homebuilders as effectively.
Lennar pays Millrose possibility charges for the correct to purchase land on Millrose’s steadiness sheet.
This strategic transfer is a part of Lennar’s ongoing shift towards an asset-light working mannequin, aiming to scale back monetary danger and improve returns by minimizing direct land possession.
I’m comfortable to personal Millrose Properties at a 6% low cost, however don’t wish to personal the inventory for the long run as I consider its potential to develop and generate upside is restricted given Lennar’s proper to buy its land.
What are the dangers?
LEN Sells Off
In the event you purchase LEN, and it sells off previous to the trade, you can lose cash. I’m not significantly anxious about this danger, as traders will doubtless proceed to bid LEN shares as much as reap the benefits of the share trade.
A significant unload might occur if some random destructive information hits LEN (for example destructive information in a lawsuit). That is unlikely however did occur throughout the MMM/NEOG trade supply. JNJ additionally had a destructive courtroom ruling throughout its trade supply, however the trade was nonetheless worthwhile.
If LEN does unload, it must unload by ~6.4% so that you can lose cash. To attenuate danger, you can additionally quick out the MRP publicity.
I seemed again on the efficiency of the guardian throughout related transactions and located that it often performs effectively (common: +2.2%; median: +3.8%)
The Alternate Is Canceled or the Odd Lot Provision is Eliminated
Lennar desires to distribute its ~20% stake in Millrose Properties and that is an environment friendly method to take action. I don’t anticipate it to be canceled, but it surely’s potential.
The odd lot provision might be eliminated, nevertheless, this has by no means occurred for break up off transactions (that I’m conscious of). Nonetheless, it might occur!
Millrose Properties (MRP) Inventory is Weak After the Share Alternate Closes
If the share trade closes and traders who’ve exchanged their LEN shares for MRP shares make 6.4%, however then MRP shares instantly depreciate by greater than 6.4%, this commerce will lose cash. In different phrases, this commerce can lose cash despite the fact that the preliminary math seems to be favorable.
Whereas this danger is legitimate, I’m comfy taking part on this commerce and consider it represents a lovely danger/reward.
Disclosure
Wealthy Howe, proprietor of Inventory Spin-off Investing (“SSOI”), doesn’t personal LEN shares however plans to purchase them. All expressions of opinion are topic to alter with out discover. This text is supplied for informational functions. We don’t warrant the completeness or accuracy of this content material. Please do your individual due diligence and seek the advice of with an funding adviser earlier than shopping for or promoting any inventory talked about on www.stockspinoffinvesting.com.