Velocity Financial has entered into a definitive agreement to acquire Toorak Capital’s operating platform, while a third-party investment firm will separately acquire Toorak’s approximately $3 billion portfolio of business-purpose loans.
The combined 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 is a business-purpose lending and asset management platform majority owned by funds advised by affiliates of KKR.
After completing the transactions, Velocity will enter into an agreement to manage the approximately $3 billion loan portfolio purchased from Toorak by the third-party investment firm.
Velocity also plans to enter into agreements to sell future Toorak loan production to that investment firm and other counterparties, supporting a more capital-light model built around origination, servicing and asset management fees.
The acquisition is expected to increase Velocity’s origination platform by approximately 76% and its servicing platform by approximately 39%.
Velocity also expects the deal to broaden its lending capabilities by significantly expanding its residential transition loan and debt service coverage ratio products, adding a direct retail origination channel and extending its geographic presence into the U.K.
Toorak provides financing to residential real estate investors to purchase, renovate, construct, and rent properties.
Since its founding in 2016, Toorak has funded more than $20 billion across nearly 43,000 loans.
Its products include short-term single-family and multifamily residential transition loans, ground-up construction financing and long-term DSCR loans secured by residential properties.
Toorak has also developed an AI-powered omnichannel asset sourcing and asset management platform and an established securitization program, including what the company described as the first rated residential transition loan securitization.
Velocity expects the transactions to be accretive to GAAP earnings in 2027 and generate an attractive return on equity.
The acquisition will be structured as a 100% cash purchase of Toorak’s operating platform.
The assets being acquired include Merchants Mortgage & Trust Corporation, Toorak’s direct origination business in the U.S., along with Toorak’s broader lending operations in the U.S. and U.K.
Toorak had approximately 280 employees as of June 30, including roughly 120 employees at Merchants.
Following the closing, Toorak is expected to maintain its existing brands across its lending businesses, including the Merchants brand.
Founder and CEO John Beacham and the existing management team will continue leading Toorak from its Tampa, Florida headquarters.
Beacham will also become Executive Vice President of Velocity Commercial Capital, while Toorak will operate as a subsidiary of Velocity Commercial Capital.
Velocity is based in Westlake Village, California, and primarily originates and manages business-purpose loans secured by one-to-four-unit residential rental and small commercial properties.
The company originates loans nationally through an independent mortgage broker network developed over more than two decades.
The transaction is expected to close in the fourth quarter of 2026, subject to customary closing conditions.
Support: Barclays served as exclusive financial advisor to Velocity, while Piper Sandler advised Toorak and KKR. And Simpson Thacher & Bartlett and Morgan Lewis & Bockius served as legal counsel to Velocity, while Dechert advised Toorak and KKR.
KEY QUOTES:
“This acquisition reflects our commitment to scaling responsibly and deepening our presence in segments where we see durable, long-term demand. 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.”
Chris Farrar, Co-Founder And CEO Of Velocity Financial
“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.”
“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 Beacham, Founder And CEO Of Toorak Capital
“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. 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.”
Avi Korn And Chris Mellia, Global Co-Heads Of Asset-Based Finance At KKR
