Toorak Capital LLC is selling its operating platform to Velocity Financial Inc. and a $3 billion business-purpose loan (BPL) portfolio to a third-party investment firm, the companies announced Thursday. The transactions have a total value of about $3.2 billion.
California-based Velocity will purchase Toorak’s business-purpose lending and asset management platform in an all-cash deal. Meanwhile, Toorak has agreed to sell roughly $3 billion in unpaid principal balance across whole loans and loans held in Toorak Mortgage Trust and TRK Trust securitizations to the investment firm.
Velocity will sign an agreement with that investment firm to manage the acquired portfolio and will also enter into forward sale arrangements to sell future Toorak-originated loans to the investor and other counterparties.
“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.
Velocity is leaning toward a capital-light, fee-based business model built on origination, servicing and asset management rather than balance-sheet loan growth. The company, which originates loans nationwide via mortgage brokers, estimates the deal will increase origination volume by about 76% and its servicing portfolio by about 39%.
It will also expand its residential transition loan (RTL) and debt-service-coverage ratio (DSCR) product offerings, while adding a direct retail origination channel and extending its geographic reach into the United Kingdom.
Founded in 2016 with backing from KKR, Florida-based Toorak provides capital to residential real estate investors. Since inception, it has reportedly funded more than $20 billion in cumulative volume across almost 43,000 loans. Toorak has about 280 employees, including roughly 120 at Merchants Mortgage & Trust Corp. Post-closing, Toorak will maintain its existing brands and retain its Tampa headquarters.
Founder and CEO John Beacham and the current management team will continue to lead Toorak. Beacham will also become an executive vice president of Velocity Commercial Capital LLC. Toorak will be a subsidiary of Velocity Commercial Capital, with its operations consolidated into Velocity’s financial statements.
“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,” Beacham said.
The parties expect the acquisition to close in the fourth quarter of 2026, subject to customary closing conditions and required regulatory approvals.
Barclays Capital Inc. served as exclusive financial adviser to Velocity. Piper Sandler & Co. advised Toorak and KKR.