Velocity Financial Makes $3B Play Into Multifamily and Single-Family Lending
Velocity Financial has announced the acquisition of the operating platform of KKR's Toorak Capital LLC, which focuses on multifamily and single-family lending. Additionally, Velocity has agreed to buy Toorak's business-purpose loans and existing properties in partnership with a third-party investment company.
While the purchase price was not disclosed, the portfolio transactions and total value of the platform came out to an estimated $3.2 billion, as of June 30. Also, the unpaid balance of the business-purpose loans totals about $3 billion, which consists of multifamily residential transition, short-term single-family, long-term rental property and ground-up construction obligations.
The operating business is divided into three units: Merchants Mortgage & Trust Corp., Toorak's lending in the U.K and U.S. and direct origination in the U.S.
Velocity expects that the acquisitions will boost its servicing platform and origination by 39 percent and 76 percent, respectively. Plus, the Westlake Village, California-based firm anticipates bolstering returns on equity and earnings, with the latter projected to be accretive to GAAP in 2027.
"This acquisition reflects our commitment to scaling responsibly and deepening our presence in segments where we see durable, long-term demand," said Chris Farrar, co-founder and CEO of Velocity, in a statement.
"Toorak's exceptional team and platform are highly complementary to what we've built, and together we're positioned to serve a broader set of borrowers and capital partners with greater speed and efficiency. We are thrilled to partner with the highly skilled team of professionals at Toorak."
With roughly 280 employees as of June, Toorak has provided funding for nearly 43,000 loans through $20 billion in volume since 2016.
Subject to customary conditions, Velocity expects the acquisition of the operating business to close during the last three months of 2026.
The move would result in Toorak becoming a subsidiary of Velocity Commercial Capital.
If and when the transactions close, Toorak will still control its lending segments, including the Merchants brand, as well as its corporate headquarters in Tampa, Florida.
Source: GlobeSt/ALM