Toorak Capital Partners Completes First Rated Residential Transition Loan Securitization
$240 Million Deal Rated by Morningstar DBRS
Toorak Capital Partners, Inc. (“Toorak”), a leading capital provider to the residential real estate lending industry, today announced the successful closing of the first-ever rated residential transition loan (“RTL”) securitization, Toorak 2024-RRTL1.
The $240 million deal was rated by Morningstar DBRS, which in October 2023 was the first Nationally Recognized Statistical Rating Organization to finalize a methodology for RTL securitizations (a deal backed by short-term bridge loans generally used to rehabilitate residential properties).
Morgan Stanley led the offering and served as initial purchasers along with Deutsche Bank, JP Morgan Securities, LLC, Performance Trust Capital Partners, and KKR Capital Markets. Significant investor demand during the marketing process led to the offering being upsized and to tightened spreads.
“This development is a pivotal moment for our industry and a significant step forward in the institutionalization of the RTL market. Toorak’s securitization has substantially broadened participation in the RTL market by making it accessible to the bulk of the fixed income investor base which require ratings,” said John Beacham, CEO of Toorak. “I want to thank Ketan Parekh who led the deal team and Aleksandra Simanovsky who tirelessly spearheaded the yearslong effort to obtain rating agency support for the asset class.”
The initial collateral underlying the Toorak 2024-RRTL1 securitization consisted of 370 residential transition loans that financed approximately 527 housing units. The securitization featured a sizeable portion (42.36%) of collateral originated by Toorak’s affiliate company – Merchants Mortgage & Trust Corporation, LLC (“Merchants”), an established originator of RTL loans mainly focused on the western U.S. with decades of experience in the space.
“Merchants is excited to contribute to this significant moment for the RTL industry, and we remain committed to originating quality loans with the highest level of service for our borrowers,” said Justin Land, CEO of Merchants.
The transaction features a two-year revolving period, during which time proceeds from loan payoffs can be reinvested in new loans.
To date, Toorak has issued over $3 billion in securitizations across 12 deals, including 8 unrated revolving transactions backed by RTL loans and 4 rated transactions backed by long-term investor loans on rental properties.
About Toorak Capital Partners
Toorak Capital Partners is an integrated correspondent lending platform that funds business-purpose loans backed by residential, multifamily, and mixed-use properties throughout the U.S. and the U.K.
With capital commitments from credit funds and accounts managed by KKR, a leading global investment firm, Toorak has revolutionized the way private lenders of business purpose real estate loans access capital. Toorak was the first to link small-balance commercial and residential originators with institutional capital and has perfected this approach in the single-family residential bridge, multifamily bridge, and 30-year single family rental lending space.
Toorak’s principals have a deep understanding of mortgage credit in the residential and commercial space with backgrounds in real estate lending, capital markets, securitization, asset-liability management, asset management and credit. Since inception, Toorak has provided more than $12 billion in capital and funded over 30,000 mortgage loans. Toorak-funded projects are expected to renovate, stabilize, or provide rental housing for over 50,000 families. Further information is available at www.toorakcapital.com.
