Tampa-based Toorak Capital will become part of publicly traded Velocity Financial in a series of transactions valued at about $3.2 billion, including the separate sale of Toorak’s roughly $3 billion loan portfolio to an unidentified investment firm.
Velocity Financial, a California-based real estate finance company, agreed to buy Toorak’s operating platform in an all-cash transaction, while the third-party investor will retain Velocity to manage the loan portfolio. The $3.2 billion figure represents the estimated combined value of the platform and portfolio based on Toorak’s June 30 balance sheet, not Velocity’s purchase price, which was not disclosed.
Velocity is acquiring a KKR-backed lending platform that has funded nearly 43,000 loans totaling more than $20 billion since 2016. The acquisition is expected to increase the scale of Velocity’s origination platform by about 76% and its servicing platform by 39%.
The company moved its headquarters from New Jersey to Water Street Tampa less than a year ago as founder and CEO John Beacham looked for a larger workforce to support its growth. Toorak had about 30 employees in Tampa when Beacham spoke with TBBW Magazine in March and was already nearing capacity in its office.
“We had a lot of trouble recruiting younger people,” Beacham said. “As the company expanded and evolved, we realized over time we were going to need many more people in the company.”
After considering several markets, Toorak chose Tampa in part for its workforce with experience in mortgage and servicing functions. Beacham said the city would be where the company operated and made decisions.
Velocity plans to keep Toorak headquartered in Tampa under Beacham and its current management team. The company will retain its existing brands, including Merchants Mortgage & Trust Corp., which employs about 120 people. Beacham will become an executive vice president of Velocity Commercial Capital. Toorak has about 280 employees globally.
Toorak finances professional real estate investors buying, renovating, building and renting residential properties. Beacham told TBBW Magazine in March that its typical customer is a local operator working through an LLC and completing several projects a year in a single market.
Beacham founded Toorak in 2016 with backing from investment funds affiliated with KKR as institutional capital moved into a lending market that had historically depended on local lenders with varying underwriting standards. He described Toorak’s objective as taking a market that was “frankly, very local” and turning it “into a normal institutional market.”
The acquisition gives Velocity that lending platform without requiring it to acquire Toorak’s $3 billion loan portfolio. After closing, Velocity will manage the portfolio and sell future Toorak loan production to that investor and other counterparties, generating origination, servicing and asset-management fees without committing as much capital to holding loans.
Velocity will also gain a direct retail origination channel and a presence in the United Kingdom. The transactions, which Velocity expects to add to its GAAP earnings in 2027, are expected to close in the fourth quarter, subject to customary closing conditions.