The acquisition materially scales Velocity’s platform and adds a capital-light, high-return, fee-based business with diversified origination channels and product suite
Velocity Financial, Inc. (NYSE: VEL; “Velocity” or the “Company”) announced a definitive agreement to acquire the operating platform of Toorak Capital LLC (“Toorak”), a business-purpose lending and asset management platform which is majority owned by funds advised by affiliates of KKR, a leading global investment firm. Toorak has also entered into separate agreements with a third-party investment firm for the purchase of Toorak’s existing portfolio of business-purpose loans (“BPL”) totaling approximately $3 billion in unpaid principal balance across whole loans and loans held in Toorak Mortgage Trust and TRK Trust securitizations.
In connection with the closing of the transactions, Velocity will also enter into an agreement with the third-party investment firm to manage the portfolio acquired from Toorak, as well as agreements to sell future Toorak loan production to the third-party investment firm and other counterparties.
The total value of the platform and portfolio transactions is estimated at approximately $3.2 billion based on Toorak’s consolidated balance sheet as of June 30, 2026.
Toorak provides real estate investors with the capital required to buy, renovate and/or rent residential properties. Since its inception in 2016, Toorak has funded over $20 billion in cumulative volume across almost 43,000 loans. Toorak’s BPL products include short-term single-family and multifamily residential transition loans (“RTL”), ground-up construction loans and long-term rental property loans (debt service coverage ratio or “DSCR” loans) secured by residential properties. Toorak has established a competitive position driven by its differentiated, AI-powered omnichannel asset sourcing and asset management platform, comprehensive product suite, industry-leading securitization program (including the first-ever rated RTL securitization), and established presence across the United States and United Kingdom markets.
The Toorak acquisition delivers compelling strategic and financial value to Velocity, including:
- Meaningfully enhancing the scale of its origination (+76%) and servicing (+39%) platform
- Broadening and diversifying lending business by significantly expanding the RTL and DSCR products and adding a direct retail origination channel
- Expanding market reach into the United Kingdom
- Increasing earnings and return on equity (“ROE”) contribution from fee-based revenue streams (origination-related and servicing / asset management fees) through forward loan sale agreements to support the transition of the Toorak platform to a primarily capital-light operating model
Velocity expects the transactions to be accretive to GAAP earnings in 2027, generate an attractive ROE, and further position the Company for sustained growth and long-term shareholder value creation.
“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 Chief Executive Officer of Velocity. “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.”
“When we founded Toorak in 2016, our thesis was that residential real estate investors were underserved by institutional capital. Over $20 billion in loans later, that thesis has been proven. Partnering with Velocity lets us pursue the opportunity at even greater scale,” said John Beacham, Founder and Chief Executive Officer of Toorak. “Our team will continue doing what it does best — serving our borrowers and lending partners with a consistent standard of excellence. I want to thank KKR for a decade of partnership and thank our employees, whose work made this outcome possible.”
“John and the Toorak team have built an impressive platform that has meaningfully improved financing options for the real estate mortgage market over the past decade,” said Avi Korn and Chris Mellia, Global Co-Heads of Asset-Based Finance at KKR. “We are pleased to have supported their growth through our Asset-Based Finance strategy and are confident that Velocity will be a strong partner to Toorak going forward.”
Transaction Details
The acquisition by Velocity is structured as a 100% cash purchase of Toorak’s operating platform, including three distinct business lines: (i) Merchants Mortgage & Trust Corporation (“Merchants”); (ii) Toorak’s U.S. direct origination business; and (iii) Toorak’s lending operations in the United States and the United Kingdom.
Globally, Toorak has approximately 280 employees as of June 30, 2026, including approximately 120 employees of Merchants. The Company expects the acquisition to close in the fourth quarter of 2026, subject to the satisfaction of customary closing conditions.
Following the consummation of the transactions, Toorak will maintain its existing brands across its respective lending segments, including the Merchants brand, and will continue to be led by Founder and Chief Executive Officer John Beacham and the current management team and retain its corporate headquarters in Tampa, Florida. Upon closing, Mr. Beacham will become an Executive Vice President of Velocity Commercial Capital, LLC and Toorak will become a subsidiary of Velocity Commercial Capital, with its operations reflected in the Company’s consolidated financial statements.
